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[2026] NSWSC 883
Supreme Court of NSW
2026-07-24
Harrison AsJ
Original judgment source is linked above.
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Morrison v Hamilton Sushi Won Pty Ltd [2026] NSWSC 883
Hearing dates: 4 March 2026
Date of orders: 24 July 2026
Decision date: 24 July 2026
Jurisdiction: Common Law
Before: Harrison AsJ
Decision: The Court orders that:
(1) Leave to appeal is refused.
(2) The Summons filed 10 July 2025 is dismissed.
(3) The plaintiffs are to pay the defendant’s costs.
Catchwords: APPEALS—Leave to Appeal—Local Court Act
CONTRACTS— Remedies—Liquidated damages—Penalty
Legislation Cited: Civil Procedure Act 2005 (NSW), s 100
Local Court Act 2007 (NSW), ss 39,40
Cases Cited: Attia v Caird Seven Pty Ltd [2016] NSWCA 271
Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164
Blatch v Archer (1774) 1 Cowp 63 (98 ER 969)
Fayad v B & G Properties Pty Ltd [2022] NSWCA 129
Gispac Pty Ltd v Michael Hill Jeweller (Australia) Pty Ltd [2024] NSWSC 18
Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8
Kay v Playup Australia Pty Ltd [2020] NSWCA 33
King of the Pack Pty Ltd v Luong [2012] NSWSC 785
Paciocco v Australia and New Zealand Banking Group Ltd (2016) 258 CLR 525; [2016] HCA 28
Category: Principal judgment
Parties: Won Mi Morrison (First Plaintiff)
Inah Jang (Second Plaintiff)
Hamilton Sushi Won Pty Ltd (Defendant)
Representation: Counsel:
J Stephenson (Plaintiffs)
J Raftery (Defendant)
Solicitors:
H & H Lawyers (Plaintiffs)
Dahan Lawyers (Defendant)
File Number(s): 2025/00264552
Publication restriction: Nil
This judgment involves an appeal from a decision of the Local Court.
Ms Won Mi Morrison (Ms Morrison) and Ms Inah Jang (Ms Jang) are the first and second plaintiffs in these proceedings but were the first and second defendants in the Local Court proceedings. They are represented by J Stephenson of counsel. Hamilton Sushi Won Pty Ltd (Hamilton Sushi Won) is the defendant in these proceedings but was the plaintiff in the Local Court proceedings. It is represented by J Raftery of counsel. Winx Kossie Pty Ltd (Winx) was the third defendant in the Local Court proceedings and is not a party to these proceedings.
The appeal primarily concerns the decision of the Local Court that held that the clauses in a Purchase Agreement entered into on or about 7 August 2018 (the First Purchase Agreement) and another Purchase Agreement entered into on or about 27 November 2018 (the Second Purchase Agreement) making provision for the payment of a deposit in the sum of $100,000.00 (the Deposit) were void ab initio as penalties. Ms Morrison and Ms Jang contend that the Local Court should have concluded that those clauses were valid and enforceable. On 19 March 2025, the Local Court delivered reasons for judgment.
Initially, Hamilton Sushi Won had filed a cross-appeal in this Court, but it has now been discontinued. Ms Morrison and Ms Jang relied on the three affidavits of Mr Kyung II Hong dated 11 September 2025, 21 November 2025 and 7 January 2026. The parties relied on a court book consisting of 3 volumes marked as exhibit A1, A2, and A3 respectively.
Mr Jaewon Heo (Mr Heo) was the sole director and secretary of Hamilton Sushi Won. Ms Injeong Heo (Ms Heo) is Mr Heo’s sister. In the period from about January 2015 to about 4 July 2018, Ms Heo worked as a manager at a sushi restaurant on Beaumont Street in Hamilton, a suburb of Newcastle (‘the Hamilton Restaurant’ or ‘the Business’). On or about 27 May 2018, Mr Heo also started work in the Hamilton Restaurant.
Ms Morrison and Ms Jang are sisters. Ms Jang is the sole director, secretary and shareholder of Winx.
Between about 4 August 2011 and 4 September 2017, Ms Morrison was the solo director and secretary of Sushi Revolution Pty Limited (Sushi Revolution). Through Sushi Revolution, Ms Morrison operated several Japanese sushi restaurants in Newcastle including the Hamilton Restaurant and one on Darby Street. Sushi Revolution was subsequently wound up and Ms Morrison and Ms Jang contended that Sushi on Hamilton Pty Ltd (Sushi on Hamilton) ‘took over’ the Hamilton Restaurant and Darby Restaurant.
Ms Morrison and Ms Jang were neither directors nor shareholders of Sushi on Hamilton. Ms Izzy Eunji Kim was the sole director, secretary and shareholder of Sushi on Hamilton.
On or about 5 July 2018, Hamilton Sushi Won took over operation of the Hamilton Restaurant.
On or about 20 July 2018, Hamilton Sushi Won and Sushi on Hamilton entered into a Service Agreement dated 20 July 2018 (the Service Agreement). The term of the Service Agreement was for two years. Clause 13 of the Service Agreement contained provisions whereby Sushi on Hamilton gave Hamilton Sushi Won a “priority to purchase the Business on the Termination Date”:
“13. Purchase of the Business
(a) Provided that the Manager has fulfilled all of its obligations under this Agreement during the Term and the Parties agreeing on the price and any other terms in relation to the sale of the Business, the Company agrees to give the Manager a priority to purchase the Business on the Termination Date.
(b) The Manager must provide an expression of interest in writing to the Company within the period from and including the day that is at least six (6) months before the Termination Date to but excluding the day that is not less than three (3) months before the Termination Date.
(c) If this Agreement is terminated before the Termination Date due to the Manager’s breach of this Agreement, the Manager loses their priority to purchase the Business under this clause.
(d) If the parties cannot reach an agreement in regards to the sale price of the Business, the Company, with the approval by the Manager, may appoint a valuer to determine the market price of the Business. All costs in connection with the appointment of a valuer shall be payable by the Company and the Manager equally.”
“2. If the sale fails to take place due to [Hamilton Sushi Won’s] circumstances,
- the deposit of $100,000 in cash is not to be received.
...”
In or about late September or early October 2018, Hamilton Sushi Won, Sushi on Hamilton and Winx entered into a Deed of Novation whereby Winx assumed the rights and obligations of Sushi on Hamilton under the Service Agreement.
On 27 November 2018, Hamilton Sushi Won and Winx entered into a further agreement, the Second Purchase Agreement. Apart from the parties, the terms of the Second Purchase Agreement were identical to the terms of the Purchase Agreement, including clause 2 in relation to the Deposit. A copy of the Second Purchase Agreement, together with an English translation was provided to this Court.
Hamilton Sushi Won operated the Business until 5 July 2020. However, it did not complete the purchase, and the Deposit was not repaid to Hamilton Sushi Won.
“1. If [Sushi on Hamilton] sells to [Hamilton Sushi Won],
- the selling price is to be $300,000 and an official selling price to be less than 10% + GST.
- [Hamilton Sushi Won] is to pay all the expenses resulting from the sale (including a legal fee).
- “2. If the sale fails to take place due to [Hamilton Sushi Won’s] circumstances,
- the deposit of $100,000 in cash is not to be received.
- [Hamilton Sushi Won] is to be supported until a new company takes it over and becomes capable of independently run it.
- the current contract conditions are to be complied with until a new company is found.
- a Japan-related food business is not to be run in the region of Newcastle.”On 21 November 2018, the second purchase agreement was signed between Winx and Hamilton Sushi Won. The terms were identical to those of the first purchase agreement, except Sushi on Hamilton was replaced as a party by Winx.
On 27 and 28 June 2022, 9 and 12 December 2022, and 27 and 28 July 2023, the matter was heard before Magistrate Barko (the Magistrate) at the Local Court. Both parties were represented by the same counsel as in the current proceedings. J Raftery of counsel appeared for Hamilton Sushi Won and J Stephenson of counsel appeared for Ms Morrison and Ms Jang.
On 19 March 2025, the Magistrate handed down his decision (the LC Judgment) in favour of Hamilton Sushi Won in the amount of $100,000, comprising of $50,000 from each of Ms Morrison and Ms Jang.
While the Magistrate’s reasons for the decision are lengthy, running to 118 pages, the main issue raised on appeal is whether he erred in deciding that the Deposit constituted a penalty.
The Magistrate’s reasons in relation to penalty clauses are at [102]-[111]:
“WAS THERE A PENALTY CLAUSE?:
[102] YES. Other than the “say-so” of Ms Jang, given very late during the Hearing, there was no evidence at all as to how the purchase price of $300,000 was formulated. Ms Jang stated that it was formulated by a business broker however I reject this assertion without it being corroborated by Ms Morrison or any documentary evidence. There was no evidence as to the valuation of the fixtures, fittings, and equipment in the Restaurant as at June 2018. There was no evidence as to the income/expenditure figures of the Business leading up to June 2018. There was no evidence as to a valuation of any “goodwill” component. The $300,000 figure seems to have plucked out of the air.
[103] Before the [First] Purchase Agreement was signed the parties’ respective Solicitors had exchanged correspondence which attached a draft copy of the Service Agreement which was not materially altered before the final version was signed. At the time that the Purchase Agreement was signed the parties were aware of the fact that the Service Agreement would require [Hamilton Sushi Won] to pay HOS $10,000 plus GST per month, some $132,000 per year. This was a payment to [Sushi on Hamilton] and/or Winx which required them to do absolutely nothing in respect of the operation of the Business – all management and operations assigned to [Hamilton Sushi Won]. The amount of the service/royalty fees were not substantiated by reference to any calculation or mathematical justification.
[104] Before the [First] Purchase Agreement was signed [Hamilton Sushi Won] had already transferred $50,000 to Ms Jang and her husband. [Hamilton Sushi Won] transferred a total of $50,000 to Ms Morrison between 2 and 5 October 2018, after the [First] Purchase Agreement, Service Agreement, and Deed of Novation were signed.
[105] The Deposit was 1/3 of the total purchase price. [Hamilton Sushi Won] was required to pay all expenses relating to the sale. If the sale failed to take place “due to [Hamilton Sushi Won]’s “circumstances” then the Deposit was non-refundable and Hamilton Sushi was required to continue operating the Business (even potentially at a loss) and continue paying the service/royalty fees until a new entity took it over. The [First] Purchase Agreement also provided an anti-competition clause which was not limited in time. The Deed of Novation made no reference to the [First] Purchase Agreement and the Second Purchase Agreement wasn’t signed until 27 November 2018. [Hamilton Sushi Won] was also prevented from sub-leasing the Business to another entity.
[106] At the time the [First] Purchase Agreement was signed it was apparent from the proposed terms of the Service Agreement that, if [Hamilton Sushi Won] did not complete the agreement then [Sushi on Hamilton] would be left with a fully operational Restaurant subject to any repairs being carried out.
[107] All of the above findings/remarks apply equally to the Second Purchase Agreement between Winx and [Hamilton Sushi Won], noting that Ms Morrison received her portion of the Deposit after the Deed of Novation was signed.
[108] I am satisfied and find that the clear intention of the parties to both purchase agreements was that Ms Morrison and Ms Jang would receive the Deposit in their personal capacities.
[109] I am satisfied and find that Ms Morrison and Ms Jang deliberately steered or guided Mr Heo and Ms Heo, [Hamilton Sushi Won], away from the potential to obtain legal advice or assistance in respect of the Deposit knowing that they had no business experience, in the sense of buying/selling businesses or owning/operating a sushi restaurant. I am satisfied that Ms Morrison and Ms Jangh [sic] realised that Ms Heo, naively, was “starry eyed” in respect of the potential income of the Business and that she had some real influence over her brother. I am also satisfied that the purchase agreements were executed without the knowledge of the respective Solicitors so that Ms Morrison and Ms Jang could personally profit from the Deposit without any financial/tax implications – whilst still potentially being able to take over the Business after being paid $264,000 in service/royalty fees over the two years and having an operating, income producing business to return to.
[110] I am not satisfied that the Deposit was a ‘genuine covenanted pre-estimate of damages. I am satisfied that the Deposit, in both purchase agreements, was extravagant, out of all proportion to, and unconscionable in amount in comparison with the greatest loss that could conceivably be proved to have followed from [Hamilton Sushi Won]’s breach. The essence of the Deposit was that it bore the predominant purpose of punishing [Hamilton Sushi Won] and thereby compelling it to perform the purchase agreements. There was no legitimate commercial interest to be protected by the Deposit. The disproportion between the Deposit and the maximum amount of foreseeable damages was such that it was unconscionable for Ms Morrison, Ms Jang, [Sushi on Hamilton], or Winx to rely upon the relevant provisions of the purchase agreements.
[111] Accordingly, I find that the Deposit provisions of both purchase agreements were void ab initio as penalties.”
By way of the Summons filed on 10 July 2025, Ms Morrison and Ms Jang seek the following orders:
Appeal allowed.
Further, if necessary, leave to appeal from the part of the decision below in relation to the claim by Hamilton Sushi Won against Ms Morrison and Ms Jang.
The LC Judgment in favour of Hamilton Sushi Won against Ms Morrison given on 13 June 2025 (and, if necessary, any verdict or judgment given on 19 March 2025) and the orders for interest and costs made in favour of Hamilton Sushi Won against Ms Morrison on 13 June 2025 be set aside.
The LC Judgment in favour of the Hamilton Sushi Won against Ms Jang given on 13 June 2025 (and, if necessary, any verdict or judgment given on 19 March 2025) and the orders for interest and costs made in favour of Hamilton Sushi Won against Ms Jang on 13 June 2025 be set aside.
In lieu thereof:
(a) judgment in favour of Ms Morrison in relation to the claim made against her by Hamilton Sushi Won; (b) judgment in favour of Ms Jang in relation to the claim made against her by Hamilton Sushi Won; (c) an order that Hamilton Sushi Won pay Ms Morrison’s costs of the claim made by Hamilton Sushi Won against Ms Morrison on the ordinary basis as agreed or assessed; and (d) an order that Hamilton Sushi Won pay Ms Jang’s costs of the claim made by Hamilton Sushi Won against Ms Jang on the ordinary basis as agreed or assessed.
In the Summons, the grounds of appeal are as follows:
The appeal is brought under section 39 of the Local Court Act 2007 (NSW) (the LCA) and, further, or in the alternative section 40 of the LCA (this is not a ground of appeal but rather a statement of the law on appeal).
The Local Court committed an error on a question of law, and further, or in the alternative, an error that involved a question of mixed law and fact:
(a) By holding that the clauses in the First Purchase Agreement and the Second Purchase Agreement making provision for the Deposit were void ab initio as penalties and should have held that those clauses were not penalties and were valid and enforceable (Appeal Ground 2). (b) When holding that the clauses in the First Purchase Agreement and the Second Purchase Agreement making provision for the Deposit were void ab initio as penalties by considering the question on the assumption that the parties to the First Purchase Agreement and Second Purchase Agreement would comply with their contractual obligations and/or by failing to consider that the clauses were an earnest of the bargain or its performance and that it was possible for the Business the subject of the First Purchase Agreement and the Second Purchase Agreement to be left in a very different state, or indeed completely destroyed, in the event that Hamilton Sushi Won did not comply with its contractual obligations (Appeal Ground 3). (c) By holding that Ms Morrison and Ms Jang were each personally liable to repay $50,000.00 to Hamilton Sushi Won and should have held that there was no such liability (Appeal Ground 4). (d) When ordering that Ms Morrison and Ms Jang pay interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) on the sum of $50,000 on and from 18 February 2021 and that Ms Morrison and Ms Jang pay 50% of Hamilton Sushi Won’s costs of the proceedings on the ordinary basis as agreed or assessed and should have ordered that Hamilton Sushi Won pay Ms Morrison’s and Ms Jang’s costs of the proceedings on the ordinary basis as agreed or assessed (Appeal Ground 5).
39 Appeals as of right
(1) A party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court may appeal to the Supreme Court, but only on a question of law.
…
40 Appeals requiring leave
(1) A party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court on a ground that involves a question of mixed law and fact may appeal to the Supreme Court but only by leave of the Supreme Court.
(2) A party to proceedings before the Court sitting in its General Division who is dissatisfied with any of the following judgments or orders of the Court may appeal to the Supreme Court, but only by leave of the Supreme Court--
(a) an interlocutory judgment or order,
(b) a judgment or order made with the consent of the parties,
(c) an order as to costs.
Although the Ms Morrison and Ms Jang submitted five grounds of appeal, these grounds essentially concern whether the ‘Deposit’ was an unenforceable penalty.
In the LC Judgment, the Magistrate sets out the law relating to penalty clauses as held in several cases. At paragraphs [59] to [60] of LC Judgment, his Honour referred to the decisions of the Court of Appeal in Kay v Playup Australia Pty Ltd [2020] NSWCA 33 at [84]-[91] (Kay v Playup) and Fayad v B & G Properties Pty Ltd [2022] NSWCA 129 at [33]-[37] which in turn refer to the judgment of the High Court in Paciocco v Australia and New Zealand Banking Group Ltd (2016) (Paciocco) 258 CLR 525; [2016] HCA 28.
In Kay v Playup, Brereton JA (Macfarlan JA and Simpson AJA agreeing) said at [84]-[85] (some footnotes omitted):
“[84] The classical statement of the law relating to penalties is to be found in the speech of Lord Dunedin in Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [[1915] AC 79]:
‘[2] The essence of a penalty is a payment of money stipulated as in terrorem of the offending party; the essence of liquidated damages is a genuine covenanted pre-estimate of damage.
[3] The question whether a sum stipulated is a penalty or liquidated damages is a question of construction to be decided upon the terms and inherent circumstances of each particular contract, judged of as at the time of the making of the contract, not as at the time of the breach.
[4] To assist this task of construction various tests have been suggested, which if applicable to the case under consideration may prove helpful, or even conclusive. Such are:
(a) It will be held to be penalty if the sum stipulated for is extravagant and unconscionable in amount in comparison with the greatest loss that could conceivably be proved to have followed from the breach.
(b) It will be held to be a penalty if the breach consists only in not paying a sum of money, and the sum stipulated is a sum greater than the sum which ought to have been paid …
(c) There is a presumption (but no more) that it is penalty when “a single lump sum is made payable by way of compensation, on the occurrence of one or more or all of several events, some of which may occasion serious and others but trifling damage.’
[85] Observing that the law relating to penalties had been discussed by the High Court in Ringrow Pty Ltd v BP Australia Pty Ltd [(2005) 224 CLR 656; [2005] HCA 71], Andrews v Australia and New Zealand Banking Group Ltd {(2012) 247 CLR 205; [2012] HCA 30], and [Paciocco], his Honour adopted the following summary, by McDougall J, with whom Gleeson JA agreed, in this Court in Arab Bank Australia Ltd v Sayde Developments Pty Ltd [(2016) 93 NSWLR 231; [2016] NSWCA 328], of the propositions which emerged from the reasons of the majority (French CJ, Kiefel, Gageler and Keane JJ) in Paciocco:
(1) Lord Dunedin’s propositions were not ‘rules of law’, but ‘distillations of principle’ (Gageler J at [143]; compare Kiefel J at [32] and Keane J at [260]).
(2) The essence of a penalty is that it is a collateral stipulation, the (or a predominant) purpose of which is to punish the borrower for breach, and thus to compel performance (Kiefel J at [29]; Gageler J at [127], [159], [166]; Keane J at [254], [259], [273]).
(3) One way of testing whether the impugned stipulation is penal – intended to punish – is to inquire whether the sum that it stipulates to be payable on breach (as I have indicated, the equitable origins and continuing equitable operation of the principle have no present relevance) is to ask whether the stipulated sum is extravagant or out of all proportion to, or unconscionable in comparison with, the maximum amount of damage that might be anticipated to follow from the breach (Kiefel J at [29], [54]; Gageler J at [158] to [162]; Keane J at [221]).
(4) ‘Damage’ in this sense is not limited to damages recoverable upon breach of contract, but may extend to damage, or losses, caused by the impairment of other legitimate commercial interests that were intended to be protected by the stipulation (Kiefel J at [33], [42] to [47]; Gageler J at [145], [160] to [162]; Keane J at [216], [283]).
(5) The analysis is to be made at the time, and taking into account the circumstances applicable, when the contract was made; not at the time of breach; the analysis is prospective, not retrospective (or as is said in some judgments, is ex ante, not ex post) (Kiefel J at [62]; Gageler J at [169]).
(6) Mere disproportion between the stipulated sum and the possible damage is not enough to indicate ‘penalty’; the disproportion must be such that it is unconscionable for the lender to rely on the stipulation (Kiefel J at [54], Gageler J at [164]; Keane J at [221], [240, [279]).”
“As the party resisting enforcement of a contractual provision on the ground that it is a penalty, Michael Hill has the onus of proving, on the balance of probabilities, it is a penalty: Multiplex Constructions Pty Ltd v Abgarus Pty Ltd (1992) 33 NSWLR 504 at 527 (Cole J); Paciocco at [167] (Gageler J). If the provision is a penalty, the onus shifts to Gispac as the party seeking to enforce the provision to justify it: Arab Bank Australia Ltd v Sayed Developments Pty Ltd (2016) 93 NSWLR 231; [2016] NSWCA 328 at [111].”
“[4] The grounds of appeal identify what are submitted to be multiple errors in the Magistrate's approach to that question and in his reasoning to the conclusion that the clause was unenforceable as a penalty. The grounds condensed into two questions:
(a) whether Clause 19.5 of the Agreement, as a matter of construction, is capable as constituting a contractual penalty; and
(b) whether the Early Termination Fee, provided for in Clause 19.5, did not constitute a genuine pre-estimate of the damage that the plaintiff company might suffer on breach where it resulted in termination of the contract.
…
[7] Counsel for the defendant submitted that because it was necessary for the Magistrate to construe the operation of Clause 19.5 by reference to the evidence for the purposes of determining whether or not it amounted to a genuine pre-estimate of damage and was unenforceable as a penalty for that reason (the second issue identified by the plaintiff as constituting error), the appeal necessarily involved a mixed question of fact and law, and that a grant of leave was required under s 40(1). Counsel also submitted that since no application was made for a grant of leave, and even if an application were made there were no special factors in favour of leave being granted, leave should be refused. Counsel referred to Ashi Pty Ltd v Karasco Investments Pty Ltd [2009] NSWSC 780 and Pratten v Johns [2010] NSWSC 327 to inform that question.
[8] The plaintiff's counsel did not seek to persuade me that leave should be granted to agitate the second question raised by the appeal or that the question involved a pure question of law such that leave was not required.
[9] I am satisfied that a correct analysis of the second question raised by the appeal involves a mixed question of fact and law and that no proper basis has been laid for a grant of leave permitting it to be agitated under the summons. Even were there a basis for considering a grant of leave (and none has been suggested), having regard to the Magistrate's detailed analysis of the evidence and his factual findings which, in my view, are well supported by the evidence, I would not have found error in his approach or his conclusions in any event. On one reading of his reasons in the judgment, some of his findings concerning the second issue raised by the appeal are purely factual findings which are beyond the reach of the appellate jurisdiction of this Court under the Local Court Act.”
So far as question (a) is concerned, her Honour was satisfied that a question of law was raised. In relation to question (b), her Honour accepted that it involved a mixed question of fact and law. As no application was made for the grant of leave and even if an application were made her Honour was satisfied that there were no special factors in favour of being granted, leave to appeal was refused.
The parties agree that the Magistrate correctly set out the law of penalty clauses in his reasons for decision. Hamilton Sushi Won bears the onus of establishing that the non-refundable payment of the deposited constituted a contractual penalty. The onus then shifts to Ms Morrison and Ms Jang to establish that the amount is a genuine pre-estimate of the damage. Each of these issues are to be determined as at the time the contract was entered into.
In Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164, Basten JA (with whom Tobias AJA agreed) set out the principles relating to leave to appeal at [32]-[39]:
“[32] The principles governing cases such as these have recently been restated in Zelden v Sewell; Henamast Pty Ltd v Sewell [2011] NSWCA 56. As Campbell JA noted (with the agreement of Young JA) at [22]:
‘It is of some importance to reiterate the principles that were stated in Carolan v AMF Bowling Pty Limited [1995] NSWCA 69, where Sheller JA said that an applicant for leave must demonstrate something more than that the trial judge was arguably wrong in the conclusion arrived at. Cole JA relied on a principle that where small claims are involved, it is important that there be early finality in determination of litigation, otherwise the costs that will be involved are likely to swamp the money sum involved in the dispute.’
[33] In Jaycar Pty Ltd v Lombardo [2011] NSWCA 284 Campbell JA, with the agreement of Young and Meagher JJA, expanded on his summary of Carolan, noting that Kirby P had recognised "that ordinarily it was appropriate to grant leave to appeal only concerning matters that involve issues of principle, questions of general public importance or an injustice which is reasonably clear, in the sense of going beyond [what is] merely arguable": at [46].
[34] Kirby P in Carolan set out a number of reasons for the constraint on rights of appeal in such cases. Not all of them have been repeated in later cases. Not all are universally relevant. Thus, the delay in obtaining a hearing in this Court appears to have been greater at that time than is the case presently, although an overly liberal approach to leave applications might well result in an increase in the period between filing and hearing.
[35] In Coulter v The Queen [1988] HCA 3; 164 CLR 350, dealing with a challenge to a refusal of the South Australian Full Court to grant leave to appeal in a criminal matter, the majority noted that a leave requirement was a preliminary procedure "recognised by the legislature as a means of enabling the court to control in some measure the volume of appellate work requiring its attention": at 356 (Mason CJ, Wilson and Brennan JJ). That statement is clearly applicable to civil, as well as criminal, appellate jurisdiction.
[36] As the High Court has noted, an application for leave is not a proceeding in the ordinary course of litigation but a preliminary procedure: Collins v The Queen [1975] HCA 60; 133 CLR 120 at 122; Coulter at 356. On the other hand, there is no reason to doubt that s 58 of the Civil Procedure Act 2005 (NSW), requiring a court to act in accordance with "the dictates of justice" when making an order or direction "for the management of proceedings", applies in respect of a leave application. One of the factors to be taken into account pursuant to s 58 is "the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction": s 58(2)(b)(vi). That provision, like s 56, identifying the overriding purpose of the Civil Procedure Act as being to facilitate the just, quick and cheap resolution of the real issues in the dispute, recognises that questions of injustice are relative. Similarly, the requirement that this Court not order a new trial unless it appears that "some substantial wrong or miscarriage" has been occasioned, also reflects a principle of parsimony in requiring that the parties be put to the expense of a second trial: UCPR, r 51.53.
[37] The idea that injustice may be measured on a scale reflects a number of underlying considerations. First, the ability to assess the existence of an injustice in a preliminary proceeding, such as a leave application, is limited. In assessing the merit of a proposed appeal, the Court may well apply a vague criterion, such as whether the judgment below is attended by "sufficient doubt". Secondly, injustice involves a balancing exercise. The delay and cost of further litigation will constitute a form of injustice to the successful party below, whatever the outcome of the appellate process. Thirdly, the entitlement of the parties to justice is not unconditional, but is dependent upon the resources of the court made available by the government and the appropriate allocation of resources by the parties, which may depend upon their individual assessments of the importance of the issues in dispute. The parties may well make disparate assessments in a particular case.
[38] The last point is reflected in the terms of s 60 of the Civil Procedure Act:
‘60 Proportionality of costs
In any proceedings, the practice and procedure of the court should be implemented with the object of resolving the issues between the parties in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute.’
[39] This direction has an important operation in respect of leave applications involving amounts below the statutory threshold. Where, as in the present case, the costs of the trial are disproportionate to the amount in dispute, the incurring of additional costs, for a potentially uncertain return, will be a factor weighing heavily against a grant of leave. Particularly is that so where there is a real prospect that, if successful, an appeal will not resolve the matter but will require a new trial.”
Ms Morrison and Ms Jang submitted that the Magistrate concluded at [77] and [78] of the LC Judgment that none of the witnesses in the case came to Court with clean hands and was also critical of the evidence given by Mr Heo and Ms Heo on behalf of Hamilton Sushi at [79] and [80]. In these circumstances, this Court should treat the evidence adduced by all parties, other than that which is the subject of factual findings made by the Magistrate with caution. These proceedings can be determined by reference to the factual findings made by the Magistrate in the LC Judgment and that in these circumstances the proceedings concern a question of law rather than a question of mixed law and fact.
Her Honour’s reasoning in King of the Pack does not apply where the appeal does not involve a consideration of the evidence beyond a consideration of the factual findings. In King of the Pack at [9], it was necessary for the Court to consider whether the Magistrate’s factual findings were supported by the evidence. Ms Morrison and Ms Jang challenged the conclusion of the Magistrate at [110] of the LC Judgment. However, they do not challenge his Honour’s factual findings.
In King of the Pack at [8], the plaintiff’s counsel did not make any submissions regarding the issue of whether the second question involved a pure question of law such that leave was not required and further the authority is not strictly binding in the present case.
If, contrary to the above submission, leave is required in relation to the whole, or part, of the appeal, then Ms Morrison and Ms Jang seek that leave and contend that the matters referred to below are special factors in favour of leave being granted.
Ms Morrison and Ms Jang submitted that first, these proceedings can be determined by reference to the factual findings made by the Magistrate and without a consideration of whether his factual findings were supported by the evidence. If the appeal does not involve a pure question of law, then the question raised by this appeal concerns a clear injustice and is closely akin to a question of law such that leave should be granted.
Second, the appeal involves a straight-forward question and a clear injustice which is apparent. The appeal only requires a consideration of whether his Honour correctly applied the legal principles.
Third, the orders made by the Local Court require them to pay interest on the judgment sums, pursuant to s 100 of the Civil Procedure Act 2005 (NSW), in the period from 18 February 2021, being the date that the Local Court proceedings were commenced at [8] of the LC Judgment. The first day of the substantive hearing in the Local Court was on 27 June 2022 and the last day on 28 July 2023. The LC Judgment was not delivered until 19 March 2025. The significant delays in the Local Court proceedings being concluded and the resulting long period in respect of which interest is payable were not the fault of Ms Morrison and Ms Jang. They submitted that in these circumstances, it would be clearly unjust not to allow them the opportunity to agitate the matters the subject of the appeal. This is especially so given the relatively high rates of interest applicable to pre-judgment interest which are referred to in Practice Note LC Civ 1 [40].
Fourth, the parties have prepared submissions in relation to the matters the subject of the appeal and are ready to have the matter determined at the hearing on 4 March 2025 without any further delay to the parties. The question can easily and expeditiously be determined by this Court at the hearing. In these circumstances, Ms Morrison and Ms Jang submitted that it would be a substantial injustice not to permit them to agitate the matters the subject of the appeal.
Fifth, the appeal involves an issue of principle, namely the correct application in the Local Court of the principles relating to penalties to monetary claims, a question of general public importance. The appeal also involves a clear injustice.
While Ms Morrison and Ms Jang submitted that adverse credit findings have been made against both parties, this difficulty can be overcome by reference to the factual findings of the Magistrate. I do not agree. The credit findings are as important as the factual findings. It’s the credit findings that inform the factual findings and the judgment as whole.
All the appeal grounds involve both mixed questions of fact and law. These issues do not raise a question of public importance, nor do they involve a clear injustice. In these circumstances, I do not grant leave to appeal.
In the event that I am wrong, I shall briefly address the grounds of appeal. I will deal with Appeal Grounds 2 and 3. Appeal Grounds 4 and 5 follow only if Morrison and Jang succeed on either or both of grounds 2 and 3.
Winx and Sushi on Hamilton had a legitimate commercial interest in protecting their position in the event that Hamilton Sushi Won did not proceed with the purchase of the Business and also failed to comply with its obligations under the Service Agreement. This question of whether or not a clause is a penalty is to be judged as at the time of entering into the Purchase Agreements and the fact that Winx was ultimately successful in its cross-claim against Sushi on Hamilton is irrelevant to that question.
The Magistrate erred by failing to properly consider that the greatest loss which Sushi on Hamilton and Winx could have suffered as a result of Hamilton Sushi Won’s breach was the destruction of all the equipment used in the Business together with the destruction of the goodwill associated with the Business. The value of the equipment used in the Business together with the value of the goodwill constituted the value of the Business the subject of the proposed sale pursuant to the Purchase Agreements.
Pursuant to the Service Agreement, Hamilton Sushi Won was in control of the Business. Depending on how Hamilton Sushi Won conducted the Business, the value of the Business could have been completely destroyed. The Local Court erred by assuming that subject to repairs, Winx would be left with a fully operational restaurant at [106] of the LC Judgment. However, his Honour erred by failing to consider what the possible cost of those repairs and the time, bother and inconvenience which would be suffered in effecting those repairs.
The Magistrate also erred by failing to consider the possible destruction of the goodwill of the Business, such as, for example, if the Restaurant was conducted in such a way that it gained the reputation for serving food which was unhygienic or inedible. In this regard, at [89] of the LC Judgment, his Honour noted that the evidence given by the defendants in the Local Court proceedings was to the effect that Hamilton Sushi Won did not perform the Business in accordance with acceptable standards and this would have had an impact on the income generated.
At [87] to [92] of the LC Judgment, the Magistrate referred to the uncontroversial evidence that as at June 2018 the Business was making between $547,500 and $912,500 per year, this likely being a reference to the sales of the Business. At [92], see also [8(f)], the Magistrate concluded that Ms Morrison and Ms Jang had satisfied him that they had reasonable grounds for making a representation that Hamilton Sushi Won would make at least $200,000 in net profit within two years of operating the Business. In these circumstances the Business was very profitable and that the value of its goodwill was substantial.
The Magistrate appears to have assumed that Hamilton Sushi Won would comply with its obligations pursuant to the Service Agreement such that if the proposed purchase did not proceed, Winx would be left with a restaurant of similar value to the value of the restaurant as of 5 July 2018. For example, at [106] of the LC Judgment where his Honour stated that if Hamilton Sushi Won did not complete the agreement then Sushi on Hamilton would be left with a fully operational restaurant subject to any repairs being carried out.
However, if it were permissible to assume that a purchaser would comply with contractual rights which a vendor might have against a purchaser whether a clause was a penalty then no provision making payment of a deposit would ever be upheld. Such an assumption is inconsistent with the function of deposit as an earnest or security of performance. To the contrary, the purpose of a deposit is to provide security in the event that a purchaser does not comply with its contractual obligations.
Further, even assuming that Hamilton Sushi Won complied with its contractual obligations and returned the Business to Winx or Sushi on Hamilton in the same condition that it was when it took it over, it is possible that the price which could be obtained on a further sale of the business might be significantly less than the price which Hamilton Sushi Won agreed to pay depending on the particular economic conditions at the time as well as the relevant circumstances applicable at the locality of the Business at the time of a future sale.
By way of example, and judging the matter at the time of entry into the First Purchase Agreement and the Second Purchase Agreement, it was possible that if Hamilton Sushi Won defaulted and a sale of the Business to another party was necessary, that at the time of any further sale that the economy may in a recession; or be subject to an event which such as the Covid pandemic which reduced demand (which in fact occurred and resulted in reduced sales at the Business – see Mr Heo’s affidavit dated 9 June 2022 at [6]); or that the locality of the Business may have become an undesirable location; or a location at which people no longer desired Japanese food; or that the demand for Japanese food generally had fallen. In any of these circumstances the price for any further sale of the Business could easily be more than one third less than the price at which the Business had been sold to Hamilton Sushi Won causing significant loss to Winx and Sushi on Hamilton.
If the reasoning of his Honour were applied to the deposit provisions in respect of a sale of land, every 10% deposit in such contracts would be void as a penalty in circumstances where the vendor would still be left with the land. In the present case, the subject of the sale is a restaurant which is much more fragile than a parcel of land where the vendor is left with the land in the event that the purchaser defaults. In this regard, the Business only comprised a leasehold interest in the premises from which the Business was conducted.
The Magistrate found that Ms Morrison and Ms Jang were not credible witnesses with both failing to answer questions directly and volunteering information which assisted their own position but was not supported by corroborative evidence. The Magistrate found them both to be disingenuous about many issues at [81] of the LC Judgment. Further, his Honour was satisfied that both Ms Morrison and Ms Jang were intent on “pocketing” their respective payments of $50,000 without transferring the funds to Sushi on Hamilton or Winx at [82] of the LC Judgment.
The Magistrate noted that many of the issues between the parties concerning the Purchase Agreements and the corporate operation of Sushi on Hamilton would have been clarified if Ms Kim was called by Ms Morrison and Ms Jang. The Magistrate noted that no evidence was called in respect of Ms Jang’s authority to act on Sushi on Hamilton’s behalf when signing the Purchase Agreement or as to the transfer of the deposit to Sushi on Hamilton or Winx at [84] of the LC Judgment.
By reason of Ms Morrison and Ms Jang failing to call Ms Kim as a witness, the Magistrate made an adverse inference that her evidence would not have assisted Ms Morrison and Ms Jang’s evidence that she was authorised on behalf of Sushi on Hamilton to execute the First Purchase Agreement and would not assist the issue of whether or not the Deposit was transferred to Sushi on Hamilton or Winx at [85] of the LC Judgment.
While the Magistrate found that the representations regarding future profits had been made by Ms Morrison and Ms Jang at [86] of the LC Judgment, he held that they had reasonable grounds for making the representation. This finding that there were reasonable grounds is somewhat difficult to follow, the Magistrate relied upon the fact that Ms Morrison had been underpaying her staff and the takings from the Business prior to entering into the Purchase Agreements and the expenses once Hamilton Sushi Won had taken over the Business at [87] of the LC Judgment.
The Magistrate rejected the argument by Hamilton Sushi Won that Sushi on Hamilton engaged in unconscionable conduct at [93] and that the Purchase Agreement was uncertain at [98] of the LC Judgment.
The Magistrate found that the First Purchase Agreement was not novated to Winx at [100] of the LC Judgment. His Honour found that the Deposit was an unenforceable penalty at [102] of the LC Judgment.
The Magistrate found that Hamilton Sushi Won was entitled to restitution of the Deposit that was paid to Ms Morrison and Ms Jang by reason of the deposit term being a penalty and there being ‘no enforceable contractual right for Hamilton Sushi Won to recover the monies and it must rely on this remedy or any other statutory entitlement…’ at [112] of the LC Judgment.
Ms Morrison and Ms Jang’s main arguments appear to be that the Magistrate assumed that Hamilton Sushi Won would comply with its obligations pursuant to the Service Agreement and that Sushi on Hamilton and Winx may suffer loss by reason of destruction of the equipment used in the Hamilton Restaurant and the destruction of goodwill.
In respect of the first issue, the plaintiffs rely upon the Magistrate’s comment that ‘if [Hamilton Sushi Won] did not complete the agreement then Sushi on Hamilton would be left with a fully operation Restaurant subject to any repairs being carried out’ at [106] of the LC Judgment. The observation by the Magistrate is correct. Further, the Magistrate is acknowledging that there may be damage caused during the period Hamilton Sushi Won operated the restaurant. Ms Morrison and Ms Jang’s argument that the Magistrate proceeded on the basis that Hamilton Sushi Won would comply with its obligations should be rejected.
In respect of the loss that may be suffered by Sushi on Hamilton, Ms Morrison and Ms Jang presumably proceed on the basis that the Court should infer that the $100,000 was a genuine pre-estimate of damages. Critical findings in the LC Judgment, which are not challenged on appeal nor dealt with in their submissions are that there was no evidence as to the valuation of the fixture, fittings and equipment in the Restaurant, that there was no evidence as to the income and expenditure figures and no evidence as to a valuation of any goodwill at the time of entering in the agreement at [102] of the LC Judgment.
Ms Morrison and Ms Jang appear to contend that the value of the equipment used in the Hamilton Restaurant and the value of the goodwill constituted that value of the Business (i.e. $300,000). However, that submission is inconsistent with the Magistrate’s findings (which are not challenged) that there was no evidence as to how the $300,000 purchase price was formulated and that it seemed to have been ‘plucked out of the air’ at [102] of the LC Judgment and with the Magistrate’s acceptance of Hamilton Sushi’s evidence that much of the equipment left at the restaurant was already damaged or in disrepair at [117] of the LC Judgment. It follows that the agreed $300,000 purchase price cannot be relied upon as evidence of the value of the equipment or goodwill.
When considering the LC Judgment as a whole, the Magistrate has provided sound reasoning for his findings that the Deposit was extravagant and out of all proportion with the greatest loss that could conceivably be proved to have followed from Hamilton Sushi Won’s breach. Furthermore, the Magistrate finding that the Deposit term was a penalty is amplified when one considers the terms of the Service Agreement. Under the Service Agreement:
Hamilton Sushi Won was required, upon termination, to immediately return all the equipment and indemnify Sushi on Hamilton for any loss or damage caused to the equipment during the term of the Service Agreement (cl. 6(d));
Sushi on Hamilton had a claim in breach of contract if Hamilton Sushi Won breached its obligations under the Service Agreement, including its obligation to maintain the goodwill (cl 4);
Sushi on Hamilton was entitled to carry out any of Hamilton Sushi Won’s obligations if Hamilton Sushi Won did not carry them out, and Hamilton Sushi Won was required to promptly pay Sushi on Hamilton’s reasonable costs of doing so (cl 8(b));
Hamilton Sushi Won indemnified Sushi on Hamilton against all liability, loss and damage of any kind whatsoever incurred or suffered directly from or in connection with a breach of the Service Agreement, any loss or damage to real or personal property (cl 9(g)); and
the termination of the Service Agreement would not prejudice any rights or remedies already accrued to any party under, or in respect of any breach, of that agreement (cl 12(d)).
The Service Agreement was novated to Winx. The cross-claim filed by Winx sought (and in part obtained) loss for damaged equipment. If Ms Morrison and Ms Jang’s submission was accepted, Hamilton Sushi would be liable twice for damage to the equipment. To be liable twice for the same loss must be a penalty.
The Magistrate also noted that Hamilton Sushi Won was required, pursuant to the Service Agreement, to pay Sushi on Hamilton or Winx $10,000 plus GST per month without Sushi on Hamilton or Winx having to do anything and that that figure was not substantiated by reference to any calculation or mathematical justification at [103] of the LC Judgment. In those circumstances, there was no evidence that Sushi on Hamilton would have suffered any loss. The Magistrate’s findings regarding the penal nature of the Deposit should not be disturbed.
The plaintiffs criticised the Magistrate for finding that there was ‘no legitimate commercial interest to be protected by the Deposit’ at [110] of the LC Judgment. There are two responses to that submission. First, his Honour used a capital D in Deposit meaning that his Honour was specifically referring to the $100,000 that was paid by Hamilton Sushi. In other words, the Magistrate found that there was no legitimate commercial interest to be protected by the value of the Deposit.
Second, and also further to that point, the sentence from the LC Judgment is cherrypicked without giving consideration to the LC Judgment as a whole or the paragraph in which it is written. That sentence is proceeded by his Honour finding that the Deposit was extravagant, out of all proportion and unconscionable in amount ‘in comparison with the greatest loss that could conceivably be proved to have followed from [Hamilton Sushi Won]’s breach’ and followed by the ‘disproportion between the Deposit and the maximum amount of foreseeable damages was such that it was unconscionable…’.
When the LC Judgment is read as a whole, it is clear that the Magistrate is not finding that the business was not a legitimate commercial interest.
The Magistrate turned his mind to the possible costs of the repairs of any goods that may be damaged. In doing so, the Magistrate observed that there was no evidence of the value of the fixtures, fittings and equipment as of June 2018 at [102] of the LC Judgment.
The Magistrate did not make any findings regarding the way Hamilton Sushi Won conducted the business and that fact is irrelevant to the determination of whether the clause was a penalty, which must be assessed at the time the contract is entered.
The Magistrate noted that the plaintiffs had made the same submission in the Court below as they make in this Court at [44(c)] of the LC Judgment and he noted that there was no evidence as to the valuation of any ‘goodwill’ at [102] of the LC Judgment.
In Attia v Caird Seven Pty Ltd [2016] NSWCA 271, the Court of Appeal observed at [102]:
“As the High Court said in Commissioner of Taxation (Cth) v Murry (1998) 193 CLR 605; [1998] HCA 42 at [12], ‘goodwill’ is notoriously difficult to define. In Murry at [19] the High Court described as useful a judicial definition of goodwill provided by Judge Swan in Haberle Crystal Springs Brewing Co v Clarke 30 F 2d 219 at 221-222 (2nd Cir 1929):
‘A going business has a value over and above the aggregate value of the tangible property employed in it. Such excess of value is nothing more than the recognition that, used in an established business that has won the favor of its customers, the tangibles may be expected to earn in the future as they have in the past. The owner’s privilege of so using them, and his privilege of continuing to deal with customers attracted by the established business, are property of value. This latter privilege is known as good will.’”
It was common ground on this appeal that the Magistrate set out the law on penalties correctly. Hamilton Sushi bears the onus of establishing that the deposit can constitute a contractual penalty. If so, Ms Morrison and Ms Jang then bears the onus of establishing that the amount is a genuine pre-estimate of the damage. These issues should be determined as at the time the contract was entered into.
Appeal Grounds 2 and 3 mainly focus on the Magistrate’s decision on whether the payment of the sum of $100,000 was a genuine covenanted pre-estimate of damages or that sum is penalty for it is extravagant and inconsiderable in amount in comparison with the greatest loss that would conceivably be proved to have followed on from the breach.
The Magistrate concluded that that the deposit in the sum of $100,000, in both purchase agreements, was extravagant, out of all proportion to, and unconscionable in amount in comparison with the greatest loss that could conceivably be proved to have followed from Hamilton Sushi's breach. His Honour set out the factual findings to support his conclusion.
His Honour stated that there was no evidence as to the formulation of the $300,000, the income/ expenditure figures of the Business leading up to June 2018 and a valuation of any “goodwill” component. His Honour rejected Ms Jang’s assertion that the purchase price of $300,000 was formulated by a business broker on the basis that it was not corroborated by Ms Morrison or any documentary evidence.
The Magistrate made an adverse inference by applying Blatch v Archer (1774) 1 Cowp 63 (98 ER 969) and Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 that Ms Kim’s evidence would not have assisted Ms Jang's evidence that she was authorised on behalf of Sushi on Hamilton to execute the First Purchase Agreement and would not assist the issue of whether or not the deposit was transferred to Sushi on Hamilton or Winx since Ms Kim was not called to give evidence in Ms Morrison and Ms Jang’s case.
His Honour also considered the content of the Service Agreement which was entered into before the Purchase Agreements. Hamilton Sushi and Sushi on Hamilton entered into a Service Agreement dated 20 July 2018. In or about late September or early October 2018, the Service Agreement was novated to Winx. The Service Agreement has created several obligations for Sushi on Hamilton as follows:
Sushi on Hamilton had a claim in breach of contract if Hamilton Sushi Won breached its obligations under the Service Agreement, including its obligation to maintain the goodwill (cl 4);
Hamilton Sushi Won was required, upon termination, to immediately return all the equipment and indemnify Sushi on Hamilton for any loss or damage caused to the equipment during the term of the Service Agreement (cl. 6(d));
Sushi on Hamilton was entitled to carry out any of Hamilton Sushi Won's obligations if Hamilton Sushi Won did not carry them out, and Hamilton Sushi Won was required to promptly pay Sushi on Hamilton's reasonable costs of doing so (cl 8(b));
Hamilton Sushi Won indemnified Sushi on Hamilton against all liability, loss and damage of any kind whatsoever incurred or suffered directly from or in connection with a breach of the Service Agreement, any loss or damage to real or personal property (cl 9(g));
and the termination of the Service Agreement would not prejudice any rights or remedies already accrued to any party under, or in respect of any breach, of that agreement (cl 12(d)).
His Honour found the requirement under the Service Agreement that Hamilton Sushi Won to pay Hamilton on Sushi $10,000 plus GST per month, some $132,000 per year has nothing to do in respect of the operation of the Business. His Honour also made findings that based on the proposed terms of the Service Agreement, if Hamilton Sushi Won did not complete the agreement, then Sushi on Hamilton would be left with a fully operational restaurant subject to any repairs being carried out.
His Honour also made findings that the clear intention of the parties to both purchase agreements was that Ms Morrison and Ms Jang would receive the deposit in their personal capacities.
After considering all factors above, his Honour found that there was no legitimate commercial interest to be protected by the value of the deposit. Many of the plaintiffs’ interests were protected by rights created under the Service Agreement, there was no legitimate interest in securing them a second time by way of the Deposit. Therefore, the essence of the Deposit was that it bore the predominant purpose of punishing Hamilton Sushi Won in the event of non-completion and thereby compelling it to perform the purchase agreements. The disproportion between the Deposit and the maximum amount of foreseeable damages was such that it was unconscionable for Ms Morrison, Ms Jang, Sushi on Hamilton or Winx to rely upon the relevant provisions of the purchase agreements, and that the deposit provisions of both purchase agreements were void ab initio as penalties.
It is trite law that the LC Judgment has to be read as a whole. The Magistrate’s findings support that the $100,000 deposit was a penalty. His Honour’s decision is correct. There is no error on a question of law.
While leave to appeal was not granted, Appeal Grounds 2 and 3 would fail in any event.
Appeal Grounds 4 and 5 only follow if Ms Morrison and Ms Jang were successful on Appeal Grounds 2 or 3. As Appeal Grounds 2 and 3 fail, so too do Appeal Grounds 4 and 5.
Leave to appeal is refused.
The Summons filed 10 July 2025 is dismissed.
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Morrison
Hamilton Sushi Won Pty Ltd
(1959) 101 CLR 298
(2016) 258 CLR 525
(2005) 224 CLR 656
(2012) 247 CLR 205
(2016) 93 NSWLR 231
(1992) 33 NSWLR 504
(1998) 193 CLR 605