Ripar Australasia Pty. Ltd. v Johnson
[2006] QDC 76
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- Unreported Judgment
- Ripar Australasia Pty. Ltd. v Johnson[2006] QDC 76
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Ripar Australasia Pty. Ltd. v Johnson[2006] QDC 76
Ripar Australasia Pty. Ltd. v Johnson[2006] QDC 76
DISTRICT COURT OF QUEENSLAND
CITATION: | Ripar Australasia Pty Ltd v Johnson & Anor [2006] QDC 076 |
PARTIES: | RIPAR AUSTRALASIA PTY LTD ACN 085 273 007 Applicant/Plaintiff V ROBERT JOHNSON Respondent/First Defendant And VIVA NIGHTCLUB PTY LTD ACN 095 211 448 Respondent/Second Defendant |
FILE NO/S: | BD 4712/05 |
DIVISION: | Civil |
PROCEEDING: | Application |
ORIGINATING COURT: | District Court of Queensland, Brisbane |
DELIVERED ON: | 13 April 2006 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 14 March 2006 |
JUDGE: | Alan Wilson SC, DCJ |
ORDER: | Application for summary judgment dismissed |
CATCHWORDS: | SUMMARY JUDGMENT – contract for sale of nightclub business – whether summary judgment seeking return of a business, its premises and equipment and chattels, should be granted |
COUNSEL: | Mr P W Hackett for the Applicant Plaintiff Mr J M Horton for the Respondent Defendants |
SOLICITORS: | McMahons National Lawyers for the Plaintiff Rostron Carlyle Solicitors for the Defendants |
- [1]Ripar applies for summary judgment for part of its claim in these proceedings, in which it seeks to recover a nightclub business, its premises, and plant and equipment the subject of a contract for sale it entered into with the defendants on 20 May 2004. It also claims damages for breach, but agrees that aspect should go to trial.
- [2]Prior to the contract Ripar operated a nightclub on leased premises in Fortitude Valley. The contract shows the defendants as purchasers of that business and the sale price as $400,000, conditional upon the lease and liquor licence being transferred and the purchasers being granted an Adult Entertainment Licence (AEP).
- [3]The purchase monies were to be paid in instalments: a deposit of $50,000, another $150,000 seven days after the purchasers received the AEP, and the balance of $200,000 by three equal monthly payments beginning thirty days after the AEP. Time was said to be of the essence. Under one of the special conditions concerning the AEP, the purchasers were to return everything if they failed to obtain that permit – although the contract is silent about the time which might be allowed for that to happen[1].
- [4]Ripar began this action on 20 December 2005, alleging a breach by the defendants in not pursuing the AEP diligently. The defendants’ pleading of 7 February 2006 admits the contract and asserts they had pursued the AEP with appropriate vigour. The application for the AEP was not, in fact, lodged until November 2004 but that was because, Mr Johnson says, of the need to prepare a lot of complex material to support it. His evidence is not contradicted.
- [5]The lease of the nightclub premises had been assigned to the second defendant when possession passed under the contract, i.e. in about mid-2004, but a year later the landlord demanded that Viva remedy some plumbing defects notified by Council. Mr Johnson says in his affidavit that he was reluctant to perform that work because the defects existed pre-contract. The affidavit does not, however, suggest he brought the matter to the plaintiff’s attention, or attempted to remedy the defects.
- [6]Instead, the landlord terminated the lease, Mr Johnson and/or Viva remained for some time as a tenant from month to month, and then the first defendant negotiated a new lease for a new tenant, What Is Next Pty Ltd – a company of which he is the sole officer, and which has 2 issued shares held by R J Properties Pty Ltd, a company of which he and a person named Jutta Johnson are the officers and in which he holds the only issued share.
- [7]Then, on 6 February 2006, the day before the defence was filed, Viva assigned the Liquor licence for the premises to What Is Next. This transfer and the new lease make it impossible for Viva to obtain an AEP, so the contract can never be completed. These frustrating events are, however, the defendants say, the product of Ripar’s own breaches because it warranted the premises and fittings, but the plumbing problems were the product of its failure to obtain the necessary approvals.
- [8]The test, in a summary judgment application, focuses upon the question whether the defendant has established some real prospect of succeeding at trial[2]. No affidavits were filed by the Ripar disputing Mr Johnson’s assertions about what he claims were legitimate, explicable delays experienced obtaining the AEP, nor the circumstances surrounding the termination of the lease. While aspects of the defendants conduct are troubling, there is also unexplained conduct on the plaintiff’s part arising, in particular, from its failure to pursue its rights earlier notwithstanding time was an essential term, and the absence of any evidence rebutting the claims about defects in the premises which, allegedly, formed the basis of the termination of the lease.
- [9]Importantly, there is no evidence contradicting an assertion in the Defence that AEP’s can take a long time – 18 months, it is pleaded – to be processed.
- [10]If the defendants make good the claims they raise about the premises, they may establish an entitlement to damages. Certainly it is impossible to deny that, despite the suspicion their conduct engenders, some tangible prospect of defending the claim about delay in respect of the AEP exists and, if they prevail there, the subsequent events may simply sound in damages claims and counterclaims which, as Ripar’s Counsel conceded, should go to trial.
- [11]There would also be, as Counsel for the defendants pointed out, some unsatisfactory or complicated aspects to summary relief of the kind Ripar seeks. The first is that the new lessee, which is not a party to the action, would be compelled to give up possession of premises to the Plaintiff who presently has, however, no lease or other right to them outside the contract, and attempt to assign its rights when the landlord’s position is unknown and it is under no legal constraint to agree.
- [12]The second is that the same circumstance applies to the Liquor licence; with no evidence the administrative criteria in the Liquor Act could be met.
- [13]Of course, a party cannot rely on its own acts to create a shield of frustration under a contract[3]. While a number of different remedies are open to the plaintiff under the contract[4], including the right to resell the premises, and claim any shortfall as part of a claim for damages, and the right to have the business and its premises ‘returned’ those claims are now, in the events which have happened, a futility for reasons involving, Mr Johnson says, the independent acts of a third party, the landlord.
- [14]As the evidence presently stands the defendants may be able to successfully argue, at trial, that none of their actions constitute breaches and were the product of misconduct, in a contractual sense, by the plaintiff who has chosen to do no more than rely upon the failure to obtain an AEP and point to what has since occurred without establishing, for example, by cogent evidence that the AEP could and should have been obtained much faster.
- [15]This is a case in which the defendants conduct while, at first blush, surprising in some respects does not disentitle them to raise defences of which it can be said that, absent contrary evidence, they appear to contain an arguable case. It is also a case in which, in the events which have happened, damages appear the principal, if not the sole, practical remedy. Summary judgment is not, then, appropriate.
- [16]I will also hear submissions about further, appropriate directions and, if sought, the continuance of orders preserving the subject matter of the contract; and, costs.
- [17]The first defendant also sought leave to withdraw an admission, in the original defence, that he was a party to the contract as a co-purchaser, with Viva. The matter was not the subject of detailed evidence, and his affidavit was not tested by cross-examination at the hearing. The matter is one which might better be determined at trial or, if the parties desire, a discrete hearing.