Dyco Hotels Pty Ltd v Laundy Hotels (Quarry) Pty Ltd [2021] NSWSC 504

Supreme Court New South Wales

Medium Neutral Citation: Dyco Hotels Pty Ltd v Laundy Hotels (Quarry) Pty Ltd [2021] NSWSC 504 Hearing dates: 12-14 April 2021 Date of orders: 10 May 2021 Decision date: 10 May 2021 Jurisdiction: Equity Before: Darke J Decision: Contract held not to have been frustrated. Vendor held to have terminated contract for breach by purchasers. Vendor entitled to forfeit deposit and recover damages for loss of bargain. Catchwords: CONTRACTS – construction – agreement for sale of hotel property and business – vendor obliged to carry on business in usual manner until completion of contract – public health orders made in response to COVID-19 pandemic limited ability to operate business – whether vendor in breach of obligation to carry on business in usual manner – obligation construed as not requiring the carrying on of business in any manner contrary to law – vendor held not to be in breach CONTRACTS – discharge by frustration – agreement for sale of hotel property and business – vendor obliged to carry on business in usual manner until completion of contract – public health orders in response to COVID-19 pandemic limited ability to operate business – actual performance of obligation departed from that which the parties contemplated would occur – whether contract frustrated – essential purpose of contract was for sale and transfer of particular assets for agreed price – vendor's obligation to carry on business until completion designed to further this essential purpose – no warranties given as to future performance of business – unexpected events did not give rise to such a fundamentally different situation that it would not be just to hold the parties bound to the terms of the contract – held that contract not frustrated CONTRACTS – damages – assessment – date for assessment of damages – vendor terminated contract for purchaser's breach – damages for loss of bargain – held that damages should be assessed as at date the bargain was lost – no justification to assess damages at later time – avoided loss principle – whether vendor obtained compensating advantage by retaining assets the subject of sale – not established that retention of assets is attributable to a decision made in consequence of the purchaser's breach – mitigation of damage principles not engaged Legislation Cited: Civil Procedure Act 2005 (NSW) s 100 Conveyancing Act 1919 (NSW) s 55(2A) Liquor Act 2007 (NSW) Liquor Regulation 2018 (NSW) Public Health Act 2010 (NSW), ss 7, 10 Public Health (COVID-19 Gatherings) Order 2020 Public Health (COVID-19 Places of Social Gathering) Order 2020 Public Health (COVID-19 Restrictions on Gathering and Movement) Order (No 2) 2020 Public Health (COVID-19 Restrictions on Gathering and Movement) Order (No 3) 2020 Cases Cited: ASIC v Atlantic 3 – Financial (Aust) Pty Ltd (No 2) [2007] 2 Qd R 399; [2006] QCA 540 Baguley v Lifestyle Homes Mackay Pty Ltd [2015] QCA 75 Barrak Corporation Pty Ltd v Jaswil Properties Pty Ltd (2016) 18 BPR 35,759; [2016] NSWCA 32 Brisbane City Council v Group Projects Pty Ltd (1979) 145 CLR 143 Carrapetta v Rado (2012) 16 BPR 30,997; [2012] NSWCA 202 Clark v Macourt (2013) 253 CLR 1; [2013] HCA 56 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696 Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd [2017] HCA 12 El Ali v Tritton [2019] NSWCA 111 Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 Gerraty v McGavin (1914) 18 CLR 152 Global Network Services Pty Ltd v Legion Telecall Pty Ltd [2001] NSWCA 279 Johnson v Perez (1988) 166 CLR 351 Krell v Henry [1903] 2 KB 740 Langley v Foster (1906) 4 CLR 167 Lindsay-Owen v Associated Dairies Pty Ltd [2000] NSWSC 1095 McNally v Waitzer [1981] 1 NSWLR 294 Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 Ng v Filmlock Pty Ltd (2014) 88 NSWLR 146; [2014] NSWCA 389 oOH! Media Roadside Pty Ltd v Diamond Wheels Pty Ltd (2011) 32 VR 255; [2011] VSCA 116 Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; [2004] HCA 35 Ronnoc Finance Ltd v Spectrum Network Systems Ltd (1997) 45 NSWLR 624 Rushcutters Bay Developments Pty Ltd v Dragon Asset Investment Pty Ltd (No 2) (2017) BPR 37,025; [2017] NSWSC 866 Ruthol Pty Ltd v Tricon (Australia) Pty Ltd [2005] NSWCA 443 Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245 Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272; [2009] HCA 8 Texts Cited: K Lewison and D Hughes, The Interpretation of Contracts in Australia (Lawbook Co, 2012) Category: Principal judgment Parties: Dyco Hotels Pty Ltd (First Plaintiff/First Cross-Defendant) Quarryman Hotel Operations Pty Ltd (Second Plaintiff/Second Cross-Defendant) Daphne Maria Parras (Third Plaintiff/Third Cross-Defendant) Colin Michael Parras (Fourth Plaintiff/Fourth Cross-Defendant) Laundy Hotels (Quarry) Pty Ltd (Defendant/Cross-Claimant) Representation: Counsel: Mr C D Freeman (Plaintiffs/Cross-Defendants) Dr C J Birch SC with Mr B DeBuse (Defendant/Cross-Claimant)