Supreme Court New South Wales Medium Neutral Citation: Castle Hill Growers Market No.1 Pty Limited v AK Fruit & Veg No. 2 Pty Limited [2018] NSWSC 137 Hearing dates: 15/02/2018 Date of orders: 15 February 2018 Decision date: 15 February 2018 Jurisdiction: Equity - Commercial List Before: McDougall J Decision: Judgment for plaintiff for $154,086 with costs. Judgment for cross-defendants with costs. Costs to be assessed on the indemnity basis from 18.11.17. Catchwords: CONTRACTS – breach of promise – oral contract – sale of business – plaintiff ordered stock on credit for defendant – whether that amount now payable to plaintiff COSTS – whether plaintiff should have a costs order – good reason to transfer proceedings to Supreme Court COSTS – plaintiff's offer of compromise – offer not accepted – plaintiff betters offer – indemnity costs awarded from date of offer of compromise No issue of principle Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW) Category: Principal judgment Parties: Castle Hill Growers Market No.1 Pty Limited (Plaintiff) AK Fruit & Veg No. 2 Pty Ltd (Defendant) Representation: Counsel: R J de Meyrick / D J Currie No appearance Solicitors: Koutzoumis Lawyers (Plaintiff) No appearance File Number(s): 2017/154726 Judgment (ex tempore – revised 15 february 2018) 1. HIS HONOUR: The plaintiff was the proprietor of a fruit and vegetable business located in Erina. In December 2016, the plaintiff negotiated to sell the business to the defendant. The negotiations were conducted between Mr Moraitis on behalf of the plaintiff and Mr Etri on behalf of the defendant. The evidence satisfies me that they reached an oral agreement for sale at a purchase price of $150,000 on a walk in walk out basis. The evidence satisfies me further that they agreed that the defendant would be let into possession of the business prior to Christmas, to take advantage of the pre-Christmas trade. In recognition of that aspect of the agreement, the purchase price was paid (although belatedly) before the exchange of the written contracts for sale of the business. 2. The plaintiff had an account with Sydney Markets Credit Services Co-operative Ltd. That enabled the plaintiff to buy fruit and vegetables on credit. That is clearly a considerable advantage for a business such as that which the plaintiff sold to the defendant. The defendant did not have such an account. Accordingly, the defendant asked (through Mr Etri to Mr Moraitis) if it could order stock on the plaintiff's account. The plaintiff agreed to this, on condition that the amount owing would be paid on settlement. In all, the purchases made through this mechanism exceeded $100,000 in value. 3. In addition (as one might expect) there were items of plant and equipment used for the purposes of the business. Some of those were leased or hired to the plaintiff. The defendant agreed to take over the use of those items of plant and equipment on the basis that it would reimburse the plaintiff for hire charges between the date of possession and the date of settlement. 4. There was considerable difficulty in persuading the defendant first of all to exchange written contracts and, thereafter, to settle the matter. Those difficulties may have been exacerbated because of the landlord's attitude; whether or not this is correct is unimportant. 5. Regardless, contracts were ultimately exchanged and completion ultimately occurred. However, the defendant has not paid to the plaintiff the value of stock purchased on its behalf through the plaintiff's account at the Sydney Markets Co-operative, nor the amount owing for hire charges. The total amount unpaid is, in round figures, $144,826. 6. The plaintiff sues to recover that sum together with interest. It may be asked why the proceedings are in this court. The answer is that at one stage, when the defendant was represented, it intimated a desire to rely on the written agreement that ultimately was made, as being the sole and complete expression of all the terms of the parties' bargain. That being so, it was necessary for the plaintiff to seek leave to amend so as to claim, in the alternative, rectification of the written agreement so that it corresponded to, or included, the terms of the earlier oral agreement that I have found was made. 7. In addition, the defendant foreshadowed a cross-claim for damages for misleading or deceptive conduct (based on representations said to have been made before the sale), and indeed such a cross-claim was filed. The damages were said to amount to $500,000 or more, although it has to be said that the particulars given are not overly persuasive. 8. In those circumstances, it seemed to me appropriate for the matter to be transferred to this court from the District Court (I should note that I was the judge who made that order). The defendant was represented on the occasion when the orders were made and consented to the transfer without any reservation of right as to costs. 9. The plaintiff claims interest on the amount for which judgment is sought. That interest has been quantified at $9,260. There is to be sworn and filed, in the course of today, an affidavit verifying that calculation. 10. By my arithmetic (which I readily concede is an uncertain guide to the real position), the amount of the claim, including interest, is $154,086 (I have ignored some odd cents). Subject to correction of my arithmetic, there should be judgment for the plaintiff against the defendant in that sum. There should also be judgment for the cross-defendants (the plaintiff and its director Mr Moraitis) against the cross-claimant on the defendant/cross-claimant's cross-claim. I direct entry of judgment accordingly. 11. In each case, I see no reason why costs should not follow the event. Since the plaintiff has foreshadowed an application for a special order as the costs, I will hear that now. [Counsel addressed]. 1. For the reasons I have just given, the plaintiff is entitled to judgment in its favour, as are the cross-defendants. As I said, costs should follow the event in each case. 2. The plaintiff has tendered an offer of compromise made on 17 November 2017. At that stage, the matter was still in the course of pre-trial preparation, and I have no doubt that had the offer been accepted, substantial costs would have been saved. The offer was open for a month. That was more than ample time to consider it. On the face of things, the offer appears to comply with UCPR Rule 20.26. 3. The offer was for $120,000. The amount for which I have indicated judgment should be given is $154,086. The amount of the claim, even ignoring interest, was $144,826. 4. The offer was not accepted. There was no evidence as to why it was not accepted. In the circumstances, the consequences of non-acceptance should follow: that is to say, costs should be payable on the ordinary basis up until the date of the offer and on the indemnity basis from that date. 5. I order the defendant to pay the plaintiff's costs of the proceedings. 6. I order the cross-claimant to pay the cross-defendants' costs of the cross-claim. 7. I order that those costs be assessed on the ordinary basis up until 17 November 2017 and on the indemnity basis thereafter. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 16 February 2018