Southern Equity Pty Limited v Timevale Pty Limited [2012] NSWSC 15

Supreme Court New South Wales

Medium Neutral Citation: Southern Equity Pty Limited v Timevale Pty Limited [2012] NSWSC 15 Hearing dates: 20 and 21 June 2011 Decision date: 03 February 2012 Jurisdiction: Equity Division Before: Brereton J Decision: (1)By effecting the 1997 renovations Timevale did not maintain the appearance of the Pub and the manner of its fit-out to the same standard and condition as at the time of the official opening, in breach of clause 8.2 of the Agreement. However, there is no evidence that this occasioned any loss, and proceedings in respect of this breach are now statute-barred. (2)While the 1997 renovations have extended the hotel premises by removing the rear wall and verandah and relocating the bar into the former open space, they have not been of such an extent or degree as to deprive the Barn of its character as a separate occupational space, so as to render the Barn a part of the hotel premises. Sales and other income generating activity in the Barn are not subject to the higher rate of royalty under clause 9.1(a). (3)Clause 9.1(b) catches only the direct proceeds, when received by Timevale, of sale through a retail outlet in the facility to an ultimate consumer, of souvenirs not incorporating EPIP and analogous sales of articles that can be taken away, including food and drink, giftware, clothing, toys, plants and nursery stock, mechanical items and pharmaceuticals. It does not catch proceeds of sale of tickets for amusement rides or facility entry fees, nor takings from amusement devices and games and commission derived from vending machines, nor rents received from tenants, whether or not calculated by reference to turnover. (4)When the Barn is not being used exclusively for a function or entertainment, Barn receipts attract the lower tier of royalty under clause 9.1(b). When it is being so used, Barn receipts incur no royalty. Sales made from outlets other than the Barn in connection with functions, wheresoever held, are not exempt; and sales made from the Barn are exempt only when the Barn is being used solely for a function or entertainment. Timevale has breached clause 9.1(b) by failing to pay royalties on sales from FJ's and other outlets when FJ's was used for functions; by not paying royalties in respect of external-to-Barn sales associated with Barn functions; and by not paying royalties (at least prior to 2006) on Barn sales not associated with exempt Barn functions. (5)When food is prepared in Blueys (or for that matter FJ's) but delivered to a function in the Barn, neither sale nor delivery occurs at the hotel premises (or at FJ's), nor does it involve a direct exploitation of EPIP. The supply of food from Blueys to exempt Barn functions does not attract the higher tier of royalty, and the supply of food from FJ's to exempt Barn functions does not attract the lower tier. (6)In breach of clause 9.3, Timevale has failed to provide in the monthly royalty statements "the number of souvenirs sold for each category of souvenirs and the moneys received for each such category". While an order that Timevale do so in the future should be made, delay in seeking it and lack of utility in granting it in respect of the past makes it inappropriate to make the order retrospective in operation. (7)Southern Equity has not waived any right to claim and receive underpaid royalties prior to 2005. It has not elected between inconsistent rights, and no estoppel arises precluding it insisting on its rights to unpaid royalties. (8)Southern Equity is entitled to an order that Timevale account to it for royalties in respect of moneys received by it from retail sales from FJ's and outlets other than the Barn associated with functions wheresoever conducted (other than food delivered to the Barn for an exempt Barn function), and (until 2006) in respect of moneys received by it from Barn sales not associated with exempt Barn functions. (9)Direct that the plaintiff bring in short minutes, on a date to be fixed, to give effect to this judgment. Catchwords: CONTRACTS - Interpretation - plaintiff's predecessor grants defendant licence to exploit intellectual property at its facility in consideration of royalties charged on certain income from facility - whether defendant is obliged to pay royalties in respect of a number of disputed categories of income - whether defendant has complied with its obligations to provide plaintiff with detailed monthly statements as to the calculation of royalty payments and to keep proper books of account and records of activities undertaken by it at the Facility. CONTRACTS - Waiver - whether plaintiff has waived its right to royalty payments. EQUITY - Remedies - Account - whether an account should be ordered. Legislation Cited: (NSW) Civil Procedure Act 2005, s 98, s 183 (NSW) Corporations Act, 1990, s 9 (CTH) Jurisdiction of Courts (Cross-Vesting) Act 1987, s 5 (NSW) Limitations Act 1969, s 14 (NSW) Trade Marks Act 1955 (NSW) Uniform Civil Procedure Rules, 2005, r 42. Cases Cited: Agricultural & Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570 Attorney-General v Blake [2001] 1 AC 268 Beaumont v Boultbee (1802) 7 Ves 599, 32 ER 241 Burns Philp Trust Co Pty Ltd v Kwikasair Freightlines Ltd [1963] 63 SR (NSW) 492 Chappell & Co Ltd v Nestle Co Ltd [1960] AC 87 Chemark Services Pty Ltd v Collector of Customs (1992, unreported, Federal Court of Australia, Ryan J, 29 May 1992) Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 Collector of Customs v Chemark Services Pty Ltd (1992) 114 ALR 531 Davis v Hueber (1923) 31 CLR 583 Dolton Ltd v Osmond (1955) 1 WLR 621 Doss v Doss (1843) 18 ER 464 Esther Celia Feiglin & Anor v Ainsworth & Ors [2011] VSC 454 Franklins Pty Ltd v Metcash Trading Ltd; Metcash Trading Ltd v Franklins Pty Ltd (2009) 76 NSWLR 603 Freitasu Dos Santos (1827) 1 Y & J 574, 576 148 ER 800,801 Grundt v The Great Builder Proprietary Goldmines Limited 59 CLR 641 International Air Transport Association v Ansett Australia Holdings Ltd (2008) 234 CLR 151 Jireh International Pty Ltd t/as Gloria Jean's Coffee v Western Exports Services Inc [2011] NSWCA 137 Kyabram Property Investments Pty Ltd v Murray [2005] NSWCA 87 Lang v Simon (1953) 53 SR (NSW) 508 Larratt v Bankers & Traders' Insurance Co (1941) 41 SR (NSW) 215 Lava Limited v Avery [2009] NSWSC 237 London Chatham & Dover Railway Co v South Eastern Railway Co [1892] 1 Ch 120 Mackenzie v Johnston (1819) 4 Madd 373, 56 ER 742 McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579 Mulcahy Hoyne (1925) 36 CLR 41 North-Eastern Railway Co v Martin (1848) 41 ER 1136 O'Connor v Speight (1804) 1 Sch & Lef 305 Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 Padwick v Stanley (1852) 9 Hare 627, 68 ER 664 Re Adelphi Hotel (Brighton) Limited [1953] 2 All ER 498 Re Sharpe (Drummond J, Unreported, Federal Court of Australia, 11 December 1992) Simpson v Connolly [1953] 1 WLR 911 Smith v Federal Commission of Taxation (1932) 48 CLR 178 Southampton Dock Co v Southampton Harbour and Pier Board (1870) LR 11 Eq 254 Taff Vale Railway Co v Nixon(1847) 1 HLC 111, 126, 9 ER 695, 701 Tito v Waddell [1977] 3 All ER 129 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 Van Rassel v Kroon (1953) 87 CLR 298 W J Alan Ltd v El Nasr Co [1972] 2 All ER 127 Warman International Ltd v Dwyer (1995) 182 CLR 544 Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 45 Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522 Wright v Edwards [1961] SASR 267 Texts Cited: Meagher, Heydon and Leeming, Equity Doctrines & Remedies, 4th ed Category: Principal judgment Parties: Southern Equity Pty Limited (plaintiff) Timevale Pty Limited (defendant) Representation: Counsel: Mr G Lucas (plaintiff) Mr C Harris SC (defendant) Solicitors: Melbourne Legal (plaintiff) Matthews Folbigg Pty Ltd (defendant) File Number(s): 2008/280635