WATERLOO HOLDINGS PTY LTD v TIMSO [1997] NSWCA 335

WATERLOO HOLDINGS PTY LTD v TIMSO SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

SHELLER and POWELL JJA, and SHEPPARD AJA 4 August 1997, 28 August 1997

[1997] NSWCA 335 Practice and Procedure — stated case

Contracts-guarantee and indemnity -interpretation of clause in deed -"indemnify"

This is an appeal from the decision of Levine J dismissing the summons for the determination of questions raised in a case stated by a Local Court magistrate.

On 9 August 1993 the parties executed a Deed of Acknowledgement, which recited that the appellant had agreed to buy all of the respondent's interest in Marquis Windows Pty Ltd, (60 percent), and that, as a condition of the purchase, the respondent had agreed to give certain releases and indemnities.

In January 1994 the appellant's accountants noted that the operating loss of Marquis Windows was $84,299 more than originally shown in the draft financial accounts. By statement of liquidated claim issued on 15 April 1994, the appellant began proceedings to recover $40,000 from the respondent, claiming an indemnity from the respondent amounting to 60 percent of the undisclosed liabilities of Marquis Windows.

The magistrate found that by para3 of the Deed, the respondent indemnified the appellant, but there was no evidence that the appellant had suffered any loss. The appellant contended that this determination was erroneous in law.

The appellant accepted that the magistrate found that there was no evidence that it had suffered any loss, but submitted that

a) this did not matter; or, alternatively

b) this Court should find that appellant had suffered loss

(i) which the parties had agreed should be assessed as the amount of the undisclosed liabilities; or, alternatively

(ii) which the Court should quantify.

In the alternative, it submitted that its claim should be treated as one for damages for misrepresentation or breach of a promise or warranty that there were no undisclosed liabilities.