Mediservices Clinics Pty Ltd & Anor v Health 24 Pty Ltd & Anor [1999] NSWCA 198

Mediservices Clinics Pty Ltd & Anor v Health 24 Pty Ltd & Anor [1999] NSWCA 198

The appeal was upheld because, properly construed in the context of the whole agreement, the warranty that the financial performance disclosed in Annexures D and E was not affected by unusual or non-recurring items related to matters not disclosed to the purchaser before the agreement. The circumstances concerning the Gribbles sublease and rental had been disclosed before the agreement, and the rental was not non-recurring because it continued under an existing lease. Accordingly the respondents were not entitled to damages for breach of warranty.

Jurisdiction
Australia
Judgment Date
23 June 1999
Procedural Posture
Appeal Concerning Construction of Agreement and Breach of Warranty Claim / Appeal From Supreme Court of New South Wales, Equity Division, Santow J
Outcome
Appeal upheld.
Legal Topics
['construction of Agreement' 'breach of Warranty' 'disclosure in Due Diligence' 'sale of Business' 'unusual or Non Recurring Items']
['contract Law' 'commercial Law'] ['construction of Agreement' 'breach of Warranty' 'disclosure in Due Diligence' 'sale of Business' 'unusual or Non Recurring Items']

Case Brief

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Procedural Posture

Appeal Concerning Construction of Agreement and Breach of Warranty Claim / Appeal From Supreme Court of New South Wales, Equity Division, Santow J

Legal Issues

  1. 1 ["Whether rental received under the Gribbles sublease was an unusual or non-recurring item affecting the financial performance of the business within the vendor's warranty." 'Whether items or information disclosed to the purchaser before the agreement were excluded from the warranty in clause 14.1 and Part 23 of the Schedule.' 'Whether the purchaser could sue for loss despite the assignee being the party entitled to receive sublease rents.']

Ratio Decidendi

The appeal was upheld because, properly construed in the context of the whole agreement, the warranty that the financial performance disclosed in Annexures D and E was not affected by unusual or non-recurring items related to matters not disclosed to the purchaser before the agreement. The circumstances concerning the Gribbles sublease and rental had been disclosed before the agreement, and the rental was not non-recurring because it continued under an existing lease. Accordingly the respondents were not entitled to damages for breach of warranty.

Court Disposition

Appeal upheld.

Orders

  • ['Appeal upheld.' 'The judgment and orders made 22 August 1997 are set aside.' 'In lieu thereof, judgment on the amended cross-claim dated 26 July 1996 for the cross-defendants.' "The cross-claimants are to pay the cross-defendants' costs of the trial." "The respondents are to pay the appellants' costs of the...