International Advisor Systems Pty Limited v XYYX Pty Limited & anor [2008] NSWSC 2

New South Wales Supreme Court

CITATION : International Advisor Systems Pty Limited v XYYX Pty Limited & anor [2008] NSWSC 2

HEARING DATE(S) : 10-11 December 2007

JUDGMENT DATE : 31 January 2008

JURISDICTION : Equity Division Expedition List

JUDGMENT OF : Brereton J

DECISION : Declaration that in breach of contract first defendant has failed to complete contract in accordance with its terms. Judgment for plaintiff against first and second defendants for damages to be assessed. Order that first cross-claim be dismissed. Order that defendants pay plaintiff's costs. Order that second cross-claim be dismissed, with costs.

CATCHWORDS : CONTRACT – Sale of franchise business – Contingent conditions – whether contract conditional on grant to franchisor of new head lease of business premises – where contract conditional on grant to purchaser/franchisee "on or before completion" of franchise including licence to occupy premises – where completion has not taken place – whether condition failed so as to entitle purchaser to rescind prior to completion. - CONTRACT – Mistake – Rectification – where no common intention of parties that contract be conditional on grant to franchisor of new head lease – where unilateral mistake by purchaser, in which vendor was in no way implicated, that contract was conditional in that way – whether rescission or rectification available. - EQUITY – Remedies – Specific performance – vendor's suit for specific performance of contract for sale of franchise business – where reasonable market for such franchises in which vendor could resell and substantial probability that damages would be slight – whether damages inadequate remedy –where serious risk that contingent condition will not be satisfied – where specific performance would have practical effect of requiring purchaser to work franchise and maintain commercial relationship with franchisor with whom it was in suit on cross-claim – where contract entered into under unilateral mistake by purchaser in which vendor was not implicated – where specific performance would impose burden disproportionate to inconvenience of leaving vendor to remedy in damages – whether even if damages inadequate remedy specific performance should be refused on discretionary grounds – where specific performance refused as damages sufficient remedy – whether damages to be ascertained by assessment or inquiry. - TRADE PRACTICES – Misleading and deceptive conduct – where franchisor's employee represented that he did not anticipate any difficulty in obtaining new lease, and that letter from lessor's agent contained terms upon which he expected new lease would be granted – whether also represented that there would be no problems in obtaining a new lease, or that there would be or was in place a new lease – whether such representations as made were misleading – where purchaser's solicitor proposed amendments to contract and proceeded to exchange not in reliance on belief that there would be or was in place a new lease but on misconceived basis that contract protected purchaser's position in event that new lease was not forthcoming – whether purchaser suffered damage by any misleading or deceptive conduct.