Waterco Limited v Tarong Pool Care Pty Ltd [2019] NSWSC 1425

Supreme Court New South Wales

Medium Neutral Citation: Waterco Limited v Tarong Pool Care Pty Ltd [2019] NSWSC 1425 Hearing dates: 16 October 2019 Date of orders: 16 October 2019 Decision date: 16 October 2019 Jurisdiction: Equity - Commercial List Before: Ball J Decision: (1) Judgment for the plaintiff against the second defendant in the amount of $190,386.91.

(2) The second defendant pay the plaintiff's costs of the proceedings against the second defendant.

(3) The proceedings against the second defendant otherwise be dismissed. Catchwords: GUARANTEE AND INDEMNITY – Actions to enforce guarantee – no issue of principle CIVIL PROCEDURE – Hearings – Adjournment – whether filing of debtor's petition seeking to be made bankrupt sufficient to warrant adjournment – whether evidence of defence to claim – whether evidence that bankruptcy order had been made Category: Principal judgment Parties: Waterco Limited (Plaintiff) Tarong Pool Care Pty Ltd (First Defendant) Cameron Joel Weekes (Second Defendant) Representation: Counsel: JS Burnett (Plaintiff) No Appearance (First Defendant) C Becattini (Solicitor) (Second Defendant)

Solicitors: Marque Lawyers (Plaintiff) No Appearance (First Defendant) JHK Legal (Second Defendant) File Number(s): 2019/274426

Judgment 1. The plaintiff, Waterco Limited, carries on a franchise business of selling swimming pool supplies and accessories and the provision of pool cleaning and maintenance services under the name "Swimart". On 27 October 2015, Waterco entered into a franchise deed and licence to occupy (LTO) with the first defendant, Tarong Pool Care Pty Ltd, and the second defendant, Mr Weekes, granting Tarong Pool Care a licence to operate and occupy a Swimart retail store at Lawnton. On 27 April 2016, Waterco entered into a second franchise deed and LTO with Tarong Pool Care and Mr Weekes in respect of Swimart's retail store in Murrumba Downs. 2. The franchise agreements are substantially in the same terms. They provide for the payment of a franchise fee and also for the payment for supplies purchased by the franchisee during the course of the franchise. By deeds of guarantee and indemnity annexed to the franchise agreements, and entered into on the same dates, Mr Weekes agreed to guarantee each and every sum of money payable by Tarong Pool Care under the franchise deeds. 3. Clause 4 of each deed of guarantee and indemnity provided: Our [meaning the guarantor's] obligations under this Guarantee and Indemnity are principal obligations: (a) to the intent that our obligations are fully enforceable against us without Waterco being required to take any steps against the Franchisee; and (b) … 1. Clause 9(b) of each deed of guarantee and indemnity provided: A certificate signed by any Director, Secretary, Administration Manager or Credit Manager of Waterco stating the balance of the monies due to Waterco by the Franchisee will be conclusive evidence of the indebtedness of the Franchisee to Waterco at the date of the certificate. 1. Under the terms of each LTO, Tarong Pool Care was required to pay license fees and other amounts in respect of its occupation of the premises from which the franchise business was conducted. Under cl 9 of each LTO, Mr Weekes guaranteed the payment of each and all sums of money, interest and damages for which Tarong Pool Care may now or later be liable to pay to Waterco. Clause 9.9(b) of each LTO provides: A certificate signed by any Director, Secretary, Administration Manager or Credit Manager of the Licensor stating the balance of the monies due to the Licensor by the Licensee will be conclusive evidence of the indebtedness of the Licensee to the Licensor at the date of the certificate. 1. On 15 August 2019, de Jonge Read on behalf of Mr Weekes and Tarong Pool Care sent a letter to Waterco stating that it was the intention of Tarong Pool Care to cease trading at the two franchise stores as at close of business on 16 August 2019. Under cl 8.B(f)(5) of the franchise deeds, Waterco had an immediate right to terminate the franchises if, among other things, Tarong abandoned the business. On 18 August 2019, in exercise of that right, Waterco terminated the franchise deeds. On 3 September 2019, Waterco commenced these proceedings against the defendants seeking urgent interlocutory relief in connection with certain assets it claimed it was entitled to recover on termination of the franchise deeds. It also relevantly claims amounts said to be due to it under the deeds of guarantee and indemnity and under the guarantee contained in the LTO from Mr Weekes. 2. Until today, there was no appearance by either of the defendants at any stage of the proceedings. On 27 September 2019, Tarong Pool Care was placed into liquidation, and as a consequence, the proceedings against it are stayed. On 11 October 2019, Hammerschlag J set the claim against Mr Weekes down for final hearing on 16 October 2019. Mr Weekes appeared by his solicitor today and sought an adjournment on the basis that he had filed a debtor's petition seeking to be made bankrupt. However, there was no evidence before the Court that Mr Weekes had any defence to Waterco's claim and there was no evidence that a bankruptcy order had actually been made. In those circumstances, I refused the adjournment. 3. By an amended summons and an amended commercial list statement, Waterco seeks judgment in the sum of $190,386.91. On 15 October 2019, Mr Brian Goh, a director of Waterco, signed two certificates. One certificate is given in respect of the Lawnton franchise. It certifies the following amounts are payable by Tarong Pool Care to Waterco in respect of that franchise: 1. Goods and services payable pursuant to clause 5.B(d) of the Franchise Deed $97,416.04 2. Franchise fees payable pursuant to clause 4.B(a) of the Franchise Deed $12,474.00 3. Rent payable pursuant to clause 2(a)(i) of the LTO $38.39 4. Outgoings payable pursuant to clauses 2(a)(i) and 7(a) of the LTO $28,462.61 5. Bank guarantee drawn by landlord payable pursuant to clause 7(a) of the LTO $14,478.39 Total outstanding debt $152,869.43