Kay v KRM (Vic) Pty Ltd;; Classic Bet (NSW) Pty Ltd v Kay & Ors [2020] NSWCA 92

Kay v KRM (Vic) Pty Ltd;; Classic Bet (NSW) Pty Ltd v Kay & Ors [2020] NSWCA 92

In appeal 2020/6311, the majority held that under the APA, the payment obligation in cl 16.1 ('buy out the tail') was incurred collectively by all three entities (Classic, Best, Ryan Kay), thus Ryan Kay is liable. The dissent held that liability was only incurred by the companies actually conducting the client business. In appeal 2020/12237, the Court held that cl 6.1 of the SSPAs was a promise only to the Buyer (Playup), not to Classic or Best. No liability to KRM had been incurred by the completion date, as the contractual prerequisites were not met. The emails did not amount to a contractual notice. Although Ryan Kay breached statutory director's duties by not causing Classic and Best...

Parties
Appellant: Ryan Kay; Respondent: KRM (Vic) Pty Ltd; First Appellant: Classic Bet (NSW) Pty Ltd; Second Appellant: Best Bet (NSW) Pty Ltd; Second Respondent: Alexander Kay
Jurisdiction
Australia
Judgment Date
12 May 2020
Procedural Posture
Civil Appeal / Determination of Two Appeals From Equity Division Judgment
Outcome
Appeal 2020/6311 by Ryan Kay dismissed by majority; appeal 2020/12237 by Classic Bet (NSW) Pty Ltd and Best Bet (NSW) Pty Ltd dismissed unanimously.
Legal Topics
Contract Interpretation, Directors' Duties, Indemnity and Liability Under Commercial Contracts, Change of Control Provisions
Contract Law Corporations Law Contract Interpretation Directors' Duties Indemnity and Liability Under Commercial Contracts Change of Control Provisions

Case Brief

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Parties

Ryan Kay

Appellant

KRM (Vic) Pty Ltd

Respondent

Classic Bet (NSW) Pty Ltd

First Appellant

Best Bet (NSW) Pty Ltd

Second Appellant

Alexander Kay

Second Respondent

Procedural Posture

Civil Appeal / Determination of Two Appeals From Equity Division Judgment

Legal Issues

  1. 1 Proper construction of the definition of 'Classicbet' and clause 16.1 of the APA (Affiliation Program Agreement) regarding liability for 'buy out the tail' payment to KRM.
  2. 2 Whether clause 6.1 of the Share Sale and Purchase Agreements (SSPAs) created a promise enforceable by Classic and Best against the Sellers to discharge the KRM liability.
  3. 3 Whether a liability to KRM was 'incurred' or 'accrued' by Classic and Best prior to completion under the SSPAs or upon entry into the APA.

Ratio Decidendi

In appeal 2020/6311, the majority held that under the APA, the payment obligation in cl 16.1 ('buy out the tail') was incurred collectively by all three entities (Classic, Best, Ryan Kay), thus Ryan Kay is liable. The dissent held that liability was only incurred by the companies actually conducting the client business. In appeal 2020/12237, the Court held that cl 6.1 of the SSPAs was a promise only to the Buyer (Playup), not to Classic or Best. No liability to KRM had been incurred by the completion date, as the contractual prerequisites were not met. The emails did not amount to a contractual notice. Although Ryan Kay breached statutory director's duties by not causing Classic and Best...

Court Disposition

Appeal 2020/6311 by Ryan Kay dismissed by majority; appeal 2020/12237 by Classic Bet (NSW) Pty Ltd and Best Bet (NSW) Pty Ltd dismissed unanimously.

Orders

  • In appeal 2020/6311, the appeal is dismissed and the appellant is to pay the respondent's costs.
  • In appeal 2020/12237, the appeal is dismissed and the appellants are to pay the respondents' costs.