MindChamps Preschool Limited v M & W Zaki Pty Limited ATF the Zaki Group Trust & Ors [2022] NSWSC 881

MindChamps Preschool Limited v M & W Zaki Pty Limited ATF the Zaki Group Trust & Ors [2022] NSWSC 881

The misleading and deceptive conduct and negligent misrepresentation claims failed because no representation that PwC had audited Little Zak's accounts was made, any statement that the data room was ready to start due diligence was too general and lacking in verifiable content to found reliance, and MindChamps did not establish reliance or causation. The contract claim succeeded because, properly construed, the Term Sheet required the sellers promptly to make available information reasonably required for due diligence, including centre-level management accounts and related financial information, and the sellers failed to do so within the required due diligence timetable. The sellers also...

Jurisdiction
Australia
Judgment Date
01 July 2022
Procedural Posture
Equity Proceeding Involving Claims for Misleading and Deceptive Conduct, Negligent Misrepresentation and Breach of Contract / Principal Judgment After Hearing
Outcome
Misleading and deceptive conduct and negligent misrepresentation claims dismissed; plaintiff succeeded in contract; deposit ordered returned; interest and costs reserved for further determination.
Legal Topics
['misleading and Deceptive Conduct' 'negligent Misrepresentation' 'breach of Contract' 'interpretation of Contract Terms' 'due Diligence Obligations' 'exclusivity Obligations' 'return of Deposit' 'interest and Costs']
['contract Law' 'australian Consumer Law' 'equity' 'torts'] ['misleading and Deceptive Conduct' 'negligent Misrepresentation' 'breach of Contract' 'interpretation of Contract Terms' 'due Diligence Obligations' 'exclusivity Obligations' 'return of Deposit' 'interest and Costs']

Case Brief

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Procedural Posture

Equity Proceeding Involving Claims for Misleading and Deceptive Conduct, Negligent Misrepresentation and Breach of Contract / Principal Judgment After Hearing

Legal Issues

  1. 1 ['Whether the fourth and fifth defendants represented that due diligence documents were fully ready so MindChamps could complete due diligence by 30 September 2016.' "Whether the fourth and fifth defendants represented that the childcare businesses' accounts were audited by PwC or another external accountant." 'Whether the defendants represented that the due diligence data room was complete before execution of the Term Sheet.' 'Whether any alleged representations were misleading and relied upon by MindChamps.' 'Whether the sellers breached the due diligence obligations in clauses 9 and 12(a)(i) of the Term Sheet.' 'Whether the sellers breached the exclusivity obligations in clause 12(a) of the Term Sheet by continuing communications with Chiwayland or Eden.' 'Whether MindChamps was entitled to return of the $500,000 deposit and other relief.']

Ratio Decidendi

The misleading and deceptive conduct and negligent misrepresentation claims failed because no representation that PwC had audited Little Zak's accounts was made, any statement that the data room was ready to start due diligence was too general and lacking in verifiable content to found reliance, and MindChamps did not establish reliance or causation. The contract claim succeeded because, properly construed, the Term Sheet required the sellers promptly to make available information reasonably required for due diligence, including centre-level management accounts and related financial information, and the sellers failed to do so within the required due diligence timetable. The sellers also...

Court Disposition

Misleading and deceptive conduct and negligent misrepresentation claims dismissed; plaintiff succeeded in contract; deposit ordered returned; interest and costs reserved for further determination.

Orders

  • ['Declare that upon the true construction of the Term Sheet made between the plaintiff as Buyer and the first, second and third defendants as Sellers on 1 September 2016 and in the events which have occurred, the first, second and third defendants are obliged by clause 10 of the Term Sheet to return the deposit of...