Waterco Limited v Tarong Pool Care Pty Ltd

[2019] NSWSC 1425

Supreme Court

New South Wales

Medium Neutral Citation:

Waterco Limited v Tarong Pool Care Pty Ltd [2019] NSWSC 1425

Hearing dates:

16 October 2019

Date of orders:

16 October 2019

Decision date:

16 October 2019

Jurisdiction:

Equity - Commercial List

Before:

Ball J

Decision:

(1)   Judgment for the plaintiff against the second defendant in the amount of $190,386.91.

 

(2)   The second defendant pay the plaintiff’s costs of the proceedings against the second defendant.

 (3)   The proceedings against the second defendant otherwise be dismissed.

Catchwords:

GUARANTEE AND INDEMNITY – Actions to enforce guarantee – no issue of principle
CIVIL PROCEDURE – Hearings – Adjournment – whether filing of debtor’s petition seeking to be made bankrupt sufficient to warrant adjournment – whether evidence of defence to claim – whether evidence that bankruptcy order had been made

Category:

Principal judgment

Parties:

Waterco Limited (Plaintiff)
Tarong Pool Care Pty Ltd (First Defendant)
Cameron Joel Weekes (Second Defendant)

Representation:

Counsel:
JS Burnett (Plaintiff)
No Appearance (First Defendant)
C Becattini (Solicitor) (Second Defendant)

  Solicitors:
Marque Lawyers (Plaintiff)
No Appearance (First Defendant)
JHK Legal (Second Defendant)

File Number(s):

2019/274426

Judgment

1. The plaintiff, Waterco Limited, carries on a franchise business of selling swimming pool supplies and accessories and the provision of pool cleaning and maintenance services under the name “Swimart”. On 27 October 2015, Waterco entered into a franchise deed and licence to occupy (LTO) with the first defendant, Tarong Pool Care Pty Ltd, and the second defendant, Mr Weekes, granting Tarong Pool Care a licence to operate and occupy a Swimart retail store at Lawnton. On 27 April 2016, Waterco entered into a second franchise deed and LTO with Tarong Pool Care and Mr Weekes in respect of Swimart's retail store in Murrumba Downs.

2. The franchise agreements are substantially in the same terms. They provide for the payment of a franchise fee and also for the payment for supplies purchased by the franchisee during the course of the franchise. By deeds of guarantee and indemnity annexed to the franchise agreements, and entered into on the same dates, Mr Weekes agreed to guarantee each and every sum of money payable by Tarong Pool Care under the franchise deeds.

3. Clause 4 of each deed of guarantee and indemnity provided:

Our [meaning the guarantor's] obligations under this Guarantee and Indemnity are principal obligations:

(a)   to the intent that our obligations are fully enforceable against us without Waterco being required to take any steps against the Franchisee; and

(b)   …

4. Clause 9(b) of each deed of guarantee and indemnity provided:

A certificate signed by any Director, Secretary, Administration Manager or Credit Manager of Waterco stating the balance of the monies due to Waterco by the Franchisee will be conclusive evidence of the indebtedness of the Franchisee to Waterco at the date of the certificate.

5. Under the terms of each LTO, Tarong Pool Care was required to pay license fees and other amounts in respect of its occupation of the premises from which the franchise business was conducted. Under cl 9 of each LTO, Mr Weekes guaranteed the payment of each and all sums of money, interest and damages for which Tarong Pool Care may now or later be liable to pay to Waterco. Clause 9.9(b) of each LTO provides:

A certificate signed by any Director, Secretary, Administration Manager or Credit Manager of the Licensor stating the balance of the monies due to the Licensor by the Licensee will be conclusive evidence of the indebtedness of the Licensee to the Licensor at the date of the certificate.

6. On 15 August 2019, de Jonge Read on behalf of Mr Weekes and Tarong Pool Care sent a letter to Waterco stating that it was the intention of Tarong Pool Care to cease trading at the two franchise stores as at close of business on 16 August 2019. Under cl 8.B(f)(5) of the franchise deeds, Waterco had an immediate right to terminate the franchises if, among other things, Tarong abandoned the business. On 18 August 2019, in exercise of that right, Waterco terminated the franchise deeds. On 3 September 2019, Waterco commenced these proceedings against the defendants seeking urgent interlocutory relief in connection with certain assets it claimed it was entitled to recover on termination of the franchise deeds. It also relevantly claims amounts said to be due to it under the deeds of guarantee and indemnity and under the guarantee contained in the LTO from Mr Weekes.

7. Until today, there was no appearance by either of the defendants at any stage of the proceedings. On 27 September 2019, Tarong Pool Care was placed into liquidation, and as a consequence, the proceedings against it are stayed. On 11 October 2019, Hammerschlag J set the claim against Mr Weekes down for final hearing on 16 October 2019. Mr Weekes appeared by his solicitor today and sought an adjournment on the basis that he had filed a debtor's petition seeking to be made bankrupt. However, there was no evidence before the Court that Mr Weekes had any defence to Waterco's claim and there was no evidence that a bankruptcy order had actually been made. In those circumstances, I refused the adjournment.

8. By an amended summons and an amended commercial list statement, Waterco seeks judgment in the sum of $190,386.91. On 15 October 2019, Mr Brian Goh, a director of Waterco, signed two certificates. One certificate is given in respect of the Lawnton franchise. It certifies the following amounts are payable by Tarong Pool Care to Waterco in respect of that franchise:

1.	Goods and services payable pursuant to clause 5.B(d) of the Franchise Deed	$97,416.04
2.	Franchise fees payable pursuant to clause 4.B(a) of the Franchise Deed	$12,474.00
3.	Rent payable pursuant to clause 2(a)(i) of the LTO	$38.39
4.	Outgoings payable pursuant to clauses 2(a)(i) and 7(a) of the LTO	$28,462.61
5.	Bank guarantee drawn by landlord payable pursuant to clause 7(a) of the LTO	$14,478.39
Total outstanding debt		$152,869.43

9. The other certificate is given in respect of the Murrumba Downs franchise. It certifies that the following amounts are payable by Tarong Pool Care to Waterco in respect of that franchise:

1.	Goods and services payable pursuant to clause 5.B(d) of the Franchise Deed	$27,960.42
2.	Franchise fees payable pursuant to clause 4.B(a) of the Franchise Deed	$6,237.00
3.	Rent payable pursuant to clause 2(a)(i) of the LTO	$3,320.06
Total outstanding debt		$37,517.48

10. Under cl 9 of the deeds of guarantee and indemnity, and cl 9.9(b) of the LTO, those certificates are conclusive of the amounts owing and are therefore conclusive of the amounts for which Waterco is entitled to judgment. No argument has been advanced for why effect should not be given to those conclusive certificates. For that reason, in my opinion, Waterco is entitled to judgment for the amount claimed.

11. In its amended summons, Waterco also sought leave to discontinue the balance of its claim against Mr Weekes. That included a claim for loss of bargain damages. The purpose of the discontinuance was to permit Waterco to consider whether at some subsequent time it should pursue that claim. In my opinion, it is not appropriate to give Waterco that leave. The matter was set down for an urgent final hearing to assist Waterco in obtaining judgment promptly. There is no evidence before the Court that supports a claim for loss of bargain damages. In my opinion, Waterco should not have the benefit both of obtaining an urgent final hearing and a right to vex Mr Weekes with further claims arising out of the same subject matter. Consequently, the balance of the claim against Mr Weekes is dismissed.

12. The orders of the Court are:

1. Judgment for the plaintiff against the second defendant in the amount of $190,386.91.

2. Order that the second defendant pay the plaintiff's costs of the proceedings against the second defendant.

3. The proceedings against the second defendant will otherwise be dismissed.

4. Direct that these orders may be taken out forthwith.

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Decision last updated: 21 October 2019