Headway Global Pty Ltd v Golden Seeds Education Pty Ltd

Headway Global Pty Ltd v Golden Seeds Education Pty Ltd - [2024] NSWSC 1197 - NSWSC 2024 case summary — Zoe

[4]

Determination

Headway Global sought payment of unpaid rent and outgoings while the lease remained on foot, and also loss of bargain damages after the lease was terminated until a new tenant was found in November 2021. Because what is sought in both categories is unpaid rent and outgoings, practically it does not matter when the lease was terminated: see Luxer Holdings Pty Ltd v Glentham Pty Ltd (2007) 35 WAR 254 (Luxer) at [32]-[33] (Buss JA, Wheeler JA agreeing).
Had it been necessary to determine the date when Headway Global terminated the lease, I consider that on the evidence, on the balance of probabilities, it occurred on 8 September 2021, when Headway Global's solicitor wrote to Golden Seeds' solicitor, demanding the return of the garage key to the property. In this regard, I do not consider relevant Golden Seeds' submissions on clause 12 of the lease, which deals with "Forfeiture and end of Lease". That clause provides for circumstances, in which the lease may come to an end, but does not assist in the determination of when Headway Global terminated the lease agreement.
I do not accept Golden Seeds' submission that Headway Global is not entitled to loss of bargain damages, because it failed to prove it was ready, willing and able to perform at the time it terminated the lease.
In DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 (DTR) at 433, Stephen, Mason and Jacobs JJ held that: A party in order to be entitled to rescind for anticipatory breach must at the time of rescission himself be willing to perform the contract on its proper interpretation. Otherwise he is not an innocent party, the common description of a party entitled to rescind for anticipatory breach, and indeed could profit from his misinterpretation of the contract.
This passage has been the subject of controversy insofar as it suggests that "a party wishing to terminate a contract for anticipatory breach of a dependent obligation must be ready and willing to perform on its part at that time": see Upside Property Group Pty Ltd v Tekin (2017) 19 BPR 38,137; [2017] NSWCA 336 (Upside) at [15] (Meagher JA, McColl and Macfarlan JJA agreeing); see also Sharjade Pty Ltd v Commonwealth (2009) 15 BPR 28,443; [2009] NSWCA 373 at [60]-[73] (Hodgson JA).
Golden Seeds' submission does not engage that controversy, as it appears to rely on the passage for a different proposition, namely, that if a party "wants to obtain any relief on the basis of the termination [for repudiation], beyond mere discharge of future obligations, then as part of its cause of action it must prove readiness, willingness and ability" to perform: Sharjade at [68]; see also Upside at [16].
Consistent with my findings in the Judgment at [83] and [89], I do not accept Golden Seeds' submission that Headway Global was not willing to perform at any time. Although Headway Global was acting on a mistaken construction of the commencement date of the lease from January 2021 by demanding rent since April 2020, nothing suggests that it was not ready, willing and able to carry out its obligations under the lease, or that it attempted to oust Golden Seeds from the premises: see Judgment at [78].
It follows that from 8 September 2021, Headway Global is entitled to damages in the sum of unpaid rent and outgoings under the lease until 15 November 2021, when Headway Global entered into a new 10-year lease for the property with annual rent payable of $96,525 including GST. The new rent was a higher amount compared to the rent that Golden Seeds was contractually obliged to pay, which was $82,500 per annum including GST. Therefore, from that time, Headway Global was in a better position than under the lease.
As noted above, the parties have agreed on the sum of $30,000 that Golden Seeds must pay Headway Global if Headway Global is entitled to damages, taking into account: 1. Rent and outgoings from 12 May 2021 (the date on which rent was payable under the lease commencing on 12 January 2021) to 14 November 2021; 2. Less the bank guarantee taken by Headway Global; and 3. Replacing pre-judgment interest with the benefit Headway Global obtained prematurely by calling in the bank guarantee.

[6]

Costs

The parties also disagree as to the appropriate costs order.
Headway Global submits that Golden Seeds should pay its costs, if it is awarded damages, but accepts that it should pay Golden Seeds' costs if "the economic outcome is that [Headway Global] is ordered to pay money to [Golden Seeds]".
Headway Global also submits that this case is not an appropriate one for the apportionment of costs, because "the issues raised were largely part of a logical series, and not logical parallels". It contends that both parties made monetary claims that required the issues of construction, rectification, repudiation and quantification of damages to be determined.
Further, Headway Global lists what it claims are four "regrettable features of this case", seemingly in an effort to suggest that the Court's costs discretion should be exercised in its favour, while not seeking indemnity costs. Those features include: 1. Golden Seeds' insistence for more than 600 pages of Mr Yang's exhibit to his affidavit to be included in the court book until the first day of trial; 2. The late communication of the decision not to require Ms Liu for cross-examination, when she had already flown in from China; 3. The fact that it was only when Mr Sun was approaching the witness box that he was notified that he was not required for cross-examination; and 4. Golden Seeds' reliance on Mr Coad's expert report which did not disclose a basis for various material figures and did not apply a discount.
In contrast, Golden Seeds submits that Headway Global should pay its costs of the proceedings. It contends that the relevant "event", from which costs should follow, is Golden Seeds' success in establishing that the lease commenced on 12 January 2021. In Golden Seeds' submission, the construction and rectification issues were the central issues in dispute and it was successful on both of them; hence, it should succeed on costs.
In the alternative, Golden Seeds submits that Headway Global should pay 75% of its costs to reflect that Global Seeds lost on its loss of profits case.

[7]

Determination

The principles governing the exercise of the Court's discretion as to costs under s 98 Civil Procedure Act 2005 (NSW) and pursuant to r 42.1 Uniform Civil Procedure Rules 2005 (NSW) where a party is only partly successful are well known and cannot be in dispute: see eg Access Training Group Ltd v Jane [2024] NSWCA 204 (Access) at [182]-[192] (Ward P, Payne JA agreeing) and [217]-[220] (Basten AJA); Creak v Ford Motor Co of Australia Ltd (No 2) [2023] NSWCA 323 (Creak) at [24] (White JA, Gleeson and Kirk JJA agreeing).
Headway Global was unsuccessful on the construction and rectification issues. However, it was successful in establishing that Golden Seeds repudiated the lease and that it was entitled to lost rent and outgoings: see Judgment at [2], [37] and [90], and above at [17]-[18].
Golden Seeds was successful in relation to the lease commencement date, either as a matter of construction or rectification: see Judgment at [20] and [66]. Further, it was successful in establishing that it was entitled to damages for Headway Global's breach of an implied negative stipulation to not call on the bank guarantee unless it was entitled to under the contract. However, that matter was always agreed by Headway Global: see above at [23]-[24]. In contrast, Golden Seeds failed to prove Headway Global repudiated the lease: see Judgment at [89]. Even if Golden Seeds had succeeded on repudiation, it would not have been awarded the amount of damages that it claimed to be entitled to ($550,000), as I preferred the expert evidence of Headway Global's expert as to quantum ($107,757): see Judgment at [108].
Therefore, both parties were only partly successful in their proceedings and, in those circumstances, I consider that each party should bear their own costs.
For completeness, I note that I do not consider that the so-called "regrettable features of this case" raised by Headway Global amount to disentitling conduct on the part of Golden Seeds so as to have a bearing on the exercise of the Court's discretion as to costs.

At a glance

Court

Decision date

Before

Source

Judgment (8 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (10)