Kay v Playup Australia Pty Ltd [2020] NSWCA 33

Kay v Playup Australia Pty Ltd [2020] NSWCA 33

Clause 4.3(b) of the SSPA, which provided for the avoidance of the Seller Warranties and Restraints upon default in Deferred Payment, was a penalty and unenforceable, as it imposed consequences out of all proportion to the legitimate interests of the seller. Relief against forfeiture is not available for these contractual rights, as the doctrine is confined to proprietary or possessory interests. The Completion Date was 22 May 2018 and Playup's obligation to the Deferred Payment was not suspended by Mr Kay's non-performance of the identified obligations.

Jurisdiction
Australia
Judgment Date
04 March 2020
Procedural Posture
Principal Judgment / Court of Appeal From Equity Division of Supreme Court of NSW
Outcome
Appeal allowed; cross-appeal allowed. Declarations of primary judge set aside and replaced; orders as to costs.
Legal Topics
['penalty Clauses' 'relief Against Forfeiture' 'dependent and Independent Obligations' 'remedies in Equity' 'construction and Interpretation of Contracts']
['equity' 'contract Law'] ['penalty Clauses' 'relief Against Forfeiture' 'dependent and Independent Obligations' 'remedies in Equity' 'construction and Interpretation of Contracts']

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Procedural Posture

Principal Judgment / Court of Appeal From Equity Division of Supreme Court of NSW

Legal Issues

  1. 1 ['What was the correct Completion Date under the Share Sale and Purchase Agreement?' "Was the buyer's obligation to pay the Deferred Payment dependent on the seller performing obligations such as agreeing the Adjustment or delivering documents?" 'Was clause 4.3(b) of the SSPA, providing for avoidance of Warranties and Restraints, a penalty?' 'Is relief against forfeiture available for the Restraints and Warranties if avoided by operation of cl 4.3(b)?']

Ratio Decidendi

Clause 4.3(b) of the SSPA, which provided for the avoidance of the Seller Warranties and Restraints upon default in Deferred Payment, was a penalty and unenforceable, as it imposed consequences out of all proportion to the legitimate interests of the seller. Relief against forfeiture is not available for these contractual rights, as the doctrine is confined to proprietary or possessory interests. The Completion Date was 22 May 2018 and Playup's obligation to the Deferred Payment was not suspended by Mr Kay's non-performance of the identified obligations.

Court Disposition

Appeal allowed; cross-appeal allowed. Declarations of primary judge set aside and replaced; orders as to costs.

Orders

  • ['Leave to appeal granted, and the draft notice of appeal stands as the notice of appeal.' 'Leave to cross-appeal granted, and the draft notice of cross-appeal stands as the notice of cross-appeal.' 'Appeal allowed.' 'Amended notice of contention dismissed.' 'Cross-appeal allowed.' 'Declarations made in Equity...