Mao v Yehuaxin Enterprise Pty Limited & Ors [2009] NSWSC 1269 (6 August 2009)

Last Updated: 30 November 2009

NEW SOUTH WALES SUPREME COURT

CITATION:
Mao v Yehuaxin Enterprise Pty Limited & Ors [2009] NSWSC 1269


JURISDICTION:
Equity

FILE NUMBER(S):
6193/08

HEARING DATE(S):
6 August 2009

JUDGMENT DATE:
6 August 2009

EX TEMPORE DATE:
6 August 2009

PARTIES:
Plaintiff: Yaming Mao
First Defendant: Yehuaxin Enterprise Pty Limited ACN 084 885 790
Second Defendant: Zhen Huang
Third Defendant: Ya Li
Fourth Defendant: Yamay Pty Limited ACN 130 066 698

JUDGMENT OF:
Slattery J

LOWER COURT JURISDICTION:
Not Applicable

LOWER COURT FILE NUMBER(S):
Not Applicable

LOWER COURT JUDICIAL OFFICER:
Not Applicable



COUNSEL:
Plaintiff: Mr C Harris SC
Defendants: No appearance

SOLICITORS:
Plaintiff: Ku & Sin Solicitors
Defendants: No appearance


CATCHWORDS:
EQUITY
equitable remedies
injunctions
change of circumstances
injunction no longer required
dissolution of injunction

LEGISLATION CITED:



CASES CITED:


TEXTS CITED:


DECISION:
1. Dissolve the injunction granted on 17 December 2008 by vacating orders 1, 2, and 3 made on that date.
2. Vacate the hearing of these proceedings set down for four days commencing on 1 September 2001.
3. Adjourn the proceedings for mention to 14 August 2009.
4. Costs reserved.



JUDGMENT:

- 5 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION


SLATTERY J

THURSDAY 6 AUGUST 2009

6193/08 YAMING MAO v YEHUAXIN ENTERPRISE PTY LIMITED ACN 084 885 790; ZHEN HUANG; YA LI; AND YAMAY PTY LIMITED ACN 130 066 698

JUDGMENT

1 HIS HONOUR: There is before me this morning a notice of motion in which the plaintiff seeks orders for the dissolution of the injunction granted on 17 December 2008 and that the hearing of these proceedings be vacated.

2 These proceedings have been in the expedition list since December of last year. On 22 May 2009 they were set down for hearing before me for four days commencing on 1 September this year. The proceedings are for the specific performance of an agreement alleged have been be made between the plaintiff and the corporate first defendant for the sale of a supermarket business to the plaintiff. I am told by Mr Harris of Senior Counsel, who appears for the plaintiff, that the written agreement at the centre of this litigation was drafted and completed by non-lawyers, is written in Mandarin and is alleged by the plaintiff to be an agreement for the sale of a supermarket business owned and operated by the first defendant. There is apparently a dispute between the parties about even that characterisation of the agreement. What there is not a dispute about is that the plaintiff paid approximately $250,000 to the first defendant at about the time this agreement was made. On what account that money was paid, whether it was on account of the sale of the business or for other purposes, is part of the parties’ dispute.

3 The principal relief which was sought at the time the proceedings were set down for hearing was specific performance of the alleged agreement for sale. The need to have this relief dealt with urgently was the original ground for expediting these proceedings. Mr Harris of Senior Counsel has told me that since the proceedings were set down for hearing on 22 May 2009 that information has come to the attention of the plaintiff, which has drastically changed the nature of the case which the plaintiff wishes to advance in these proceedings.

4 The circumstances of that change are the following. The plaintiff made further enquiries about the premises on which the supermarket business which was the subject of the sale agreement was to operate. It turned out that the lease on which the first defendant was operating the business was to expire on 30 June 2009. The plaintiff’s inquiries revealed that the option to renew that lease, which was required to be exercised by the first defendant by 31 December 2008, had not been exercised and that no appropriate notice under that lease had been given. That meant that the lease of the business premises expired on 30 June 2009.

5 That in turn means that the secure foundation for the operation of the business, which is the subject of the specific performance claim has now disappeared. There would be little point in the plaintiff seeking specific performance of the sale of a business for which there is no lease allowing it to operate either in the name of the vendor or the purchaser.

6 Having become aware of these facts and after negotiating directly with the landlord of the premises on 3 August 2009 the plaintiff executed a new lease over the premises. The plaintiff is now taking a quite different commercial course, there being no point any more in him acquiring the first defendant's business. The plaintiff proposes to open his own business, utilising the new lease which has now been signed.

7 This has important procedural consequences. For understandable reasons the plaintiff no longer wishes to pursue his specific performance action. Mr Harris indicates that the plaintiff wishes to assess the facts that may underlie and then the viability of what may now only be an action for damages for the loss of opportunity for the plaintiff to occupy the premises from the proposed settlement date under the alleged sale of the first defendant’s business up to 30 June 2009 and possibly beyond.

8 Mr Harris says to me that the plaintiff’s assessment of that damages claim cannot reasonably be undertaken until some understanding is reached by the plaintiff about the profitability of the new supermarket business on the site, once he has started operating it. Possession has only just been taken of the site. Steps are now being taken to acquire assets and to start up the business, which has not yet opened.

9 It could not reasonably be expected in these circumstances that the plaintiff will be in a position to re-frame its claim and present evidence in a way that could be responded to by the defendants before the commencement of the hearing on 1 September. The plaintiff needs to re-open the business to assess how it runs for a sufficient period of time to provide reasonable evidence in support of his damages claim. Any lay and expert evidence about the operations of the business will need to be gathered, settled by lawyers, served on the defendants and then the defendants would need a reasonable opportunity to respond to it before any trial as to damages could proceed.

10 Looking at these changed circumstances, all of these steps cannot realistically be completed in my view, even with the closest supervision and directions of the Court, before a hearing commencing on 1 September. That being so, it seems to me that the appropriate course in this case, notwithstanding the Court's reluctance to vacate expedition list hearings where the Court's time has been set aside, is to vacate the hearing date and I so order. The hearing of these proceedings before me on 1 September 2009 will be vacated.

11 I am also asked in the motion before me to dissolve the injunction granted on 17 December 2008. The orders made on that day were in the following terms:

“The Court Orders that

1. Until further order, that each of the defendants be restrained from entering into any contract:

i) For the sale of the whole or any part of the "Daily Fortune Supermarket" business, or any of its assets; and/or

ii) Mortgaging, charging or otherwise encumbering the title to the whole or any part of the "Daily Fortune Supermarket" business, or any of its assets, except in the normal course of carrying on the supermarket business.

2. Order, until further order, that the first, second and third defendants:

i) Pay all income received from the operation of the business, including income received through eftpos or other electronic sources, but only the income, into account number 062184 10626091 at The Commonwealth bank.

ii) Pay all rent and other expenses of the business, but only those expenses, out of that account.

3. Order the first defendant to make available for inspection by the plaintiff:

i) Its bank records relating to the accounts into which income from the "Daily Fortune Supermarket" business has been paid since 12 March 2008.

ii) Its bank records relating to the account referred to in order 2 above since 12 March 2008. “

12 This interim injunction was granted for the purpose of preserving the value of the business pending the trial of a specific performance suit. The injunction is no longer necessary given the changed circumstances. All sides seem to acknowledge that and so I also make order 1 in the notice of motion and vacate orders 1, 2, and 3 made on 17 December 2008.

13 I will reserve costs and I will adjourn the matter for mention to Friday, 14 August 2009.

14 Accordingly the orders I make are the following:

1. Dissolve the injunction granted on 17 December 2008 by vacating orders 1, 2, and 3 made on that date.

2. Vacate the hearing of these proceedings set down for four days commencing on 1 September 2001.

3. Adjourn the proceedings for mention to 14 August 2009.

4. Costs reserved.

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LAST UPDATED:
27 November 2009