de Zylva v Hill [2009] NSWCA 435

de Zylva v Hill [2009] NSWCA 435

The Court held that breach of clause 20 was established only to the extent that Mr de Zylva did financial planning work for his own benefit in company time, and breach of clause 23 was not shown to be wrongly found. However, because no fundamental breach justifying termination was pleaded or found, the winding up of the company and total loss of share value were not recoverable as damages for those breaches under Hadley v Baxendale. The only reasonably reliable damages for the clause 20 breach were one half of the commissions earned by Mr de Zylva for Trade Wins, plus interest. No substantial damages were made out for failure to mediate because there were no findings as to what would have...

Jurisdiction
Australia
Judgment Date
23 December 2009
Procedural Posture
Appeal From District Court Judgment on a Cross Claim in a Contractual Dispute Between Former Partners in an Accounting Practice / New South Wales Court of Appeal
Outcome
Appeal allowed.
Legal Topics
['measure of Damages for Breach of Contract' 'remoteness of Damage' 'shareholders Agreement' 'mediation Clause' 'winding Up on Just and Equitable Ground' 'costs']
['contracts' 'company Law' 'civil Procedure'] ['measure of Damages for Breach of Contract' 'remoteness of Damage' 'shareholders Agreement' 'mediation Clause' 'winding Up on Just and Equitable Ground' 'costs']

Case Brief

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Procedural Posture

Appeal From District Court Judgment on a Cross Claim in a Contractual Dispute Between Former Partners in an Accounting Practice / New South Wales Court of Appeal

Legal Issues

  1. 1 ['Whether Mr de Zylva breached clause 20 of the Share Purchase and Shareholders Agreement by not devoting all working time and attention to the business.' 'Whether Mr de Zylva breached clause 23 of the agreement by failing to endeavour in good faith to settle the dispute by ACDC mediation.' 'Whether damages for loss of earnings, loss of value of shares or business, winding-up costs, payments to suppliers, tax payments, legal costs and interest were recoverable for the breaches found.' 'Whether, in the absence of a pleaded and found fundamental breach justifying termination, losses flowing from winding up of the company were within either limb of Hadley v Baxendale.']

Ratio Decidendi

The Court held that breach of clause 20 was established only to the extent that Mr de Zylva did financial planning work for his own benefit in company time, and breach of clause 23 was not shown to be wrongly found. However, because no fundamental breach justifying termination was pleaded or found, the winding up of the company and total loss of share value were not recoverable as damages for those breaches under Hadley v Baxendale. The only reasonably reliable damages for the clause 20 breach were one half of the commissions earned by Mr de Zylva for Trade Wins, plus interest. No substantial damages were made out for failure to mediate because there were no findings as to what would have...

Court Disposition

Appeal allowed.

Orders

  • ['Order 2 below (the judgment on the cross-claim) set aside, and in lieu thereof judgment for Mr Hill against Mr de Zylva for $19,102.31, to take effect as at 3 April 2009.' "Mr Hill to pay Mr de Zylva's costs of the appeal, and to have a certificate under the Suitors' Fund Act 1951 if otherwise eligible."]