Café Du Liban Pty Ltd v Bespoke Garage Pty Ltd [2017] NSWSC 779

Supreme Court New South Wales

Medium Neutral Citation: Café Du Liban Pty Ltd v Bespoke Garage Pty Ltd [2017] NSWSC 779 Hearing dates: 10 May 2017 Date of orders: 16 June 2017 Decision date: 16 June 2017 Jurisdiction: Common Law Before: Beech-Jones J Decision: (1) On or before 31 July 2017 the parties file and serve draft forms of order to give effect to these reasons together with submissions in support which are not to exceed 5 pages; (2) The proceedings be listed for mention on 6 September 2017 at 9.30am. Catchwords: LOCAL COURT APPEAL – agreement for the supply of coffee – agreement for the hire of a coffee machine – customer repudiated the agreements – supplier sued for amounts owing under agreements and outstanding rental payments and price payable for minimum amount of coffee for remainder of term of contract – whether quality of coffee supplied in accordance with terms of contract – whether supply contract subject to a three month probation period – whether clause enabling recovery of price payable for minimum amount of coffee for remainder of term of contract was a penalty – whether clause enabling recovery of rental payments for coffee machine for term of agreement was a penalty – challenge to credit finding on appeal to Local Court – no question of law raised in making credit finding – error of law on part of presiding Magistrate in determining whether contract subject to a probation period – leave granted to raise question of law and fact – held supply contract not subject to probation period – presiding Magistrate erred in addressing whether contractual clauses were penalties – leave granted to raise question of law and fact to enable that to be determined – whether the clause requires the payment of a sum "out of all proportion" to the protection of the legitimate interests of the non defaulting party – whether the totality of the circumstances suggests that the only, or at least predominant, purpose of the clause is to punish the defaulting party – Held clause in supply contract was a penalty – clause in loan contract for hire of coffee machine not a penalty – parties directed to bring in proposed orders to give effect to Court's reasons. Legislation Cited: Local Court Act 2007 Cases Cited: Amev-UDC Finance Ltd v Austin [1986] HCA 63; 162 CLR 170 Andrews v ANZ Banking Group Ltd [2012] HCA 30; 247 CLR 205 Crawford Fitting Co v Sydney Valve & Fittings Pty Ltd (1988) 14 NSWLR 438 Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26; 77 ALJR 1088 Dunlop Pneumatic Tyre Company v New Garage and Motor Company Limited (1914) 1 AC 79 Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; 218 CLR 471 Fox v Percy [2003] HCA 22; 214 CLR 118 IAC (Leasing) Ltd v Humphrey [1972] HCA 1; 126 CLR 131 Jaffarie v Quality Castings Pty Ltd [2015] NSWCA 335 Lamson Store Service Co Ltd v Russell Wilkins & Sons Ltd [1906] HCA 87; 4 CLR 672 Legione v Hateley [1983] HCA 11; 152 CLR 406 Lesley-Swan v Owners SP 32725 [2013] NSWSC 1635 Masters v Cameron [1954] HCA 72; 91 CLR 353 Maybury v Atlantic Union Oil Co Ltd [1953] HCA 89; 89 CLR 507 O'Dea v Allstates Leasing System (WA) Pty Ltd [1983] HCA 3; 152 CLR 359 Paciocco v Australia and New Zealand Banking Group Ltd [2016] HCA 28; 90 ALJR 835 Ringrow Pty Ltd v BP Australia Pty Ltd [2005] HCA 71; 224 CLR 656 Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 The Australian Gas Light Co v The Valuer General (1940) 40 SR (NSW) 126 The Commonwealth of Australia v Amann Aviation Pty Ltd [1991] HCA 54; 174 CLR 64 Category: Principal judgment Parties: Café Du Liban Pty Ltd (First Plaintiff) Dorothy Krahe (Second Plaintiff) Bespoke Garage Pty Ltd (Defendant) Representation: Counsel: A Moutasallem (Plaintiffs) J Gatland (Defendant)