FEDERAL COURT OF AUSTRALIA

Lucas v Zomay Holdings Pty Ltd [2019] FCA 830

ORDERS

THE COURT ORDERS THAT:

1.    The parties have liberty to apply.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

O’CALLAGHAN J:

introduction

1    This is a dispute about the sale of a pharmacy business in the Eastlands Shopping Centre at Rosny Park, in Tasmania. The shopping centre, Tasmania’s largest, is on the eastern shore of the Derwent River and is a part of greater Hobart. The shopping centre has about 100 retail businesses including food stores, fashion stores, and one pharmacy.

2    The pharmacy business, known as Priceline Pharmacy Eastlands, is owned and operated by the first respondent (Zomay). The second respondent (Mr Hampton) is a pharmacist. He is the sole director and the sole shareholder of Zomay.

3    The applicant (Mr Lucas) is also a pharmacist. He is the Tasmanian State Manager of the “Chemist Warehouse/My Chemist Group”.

4    Mr Lucas contends that he entered into a legally binding contract for the purchase of the Priceline Pharmacy Eastlands business and he seeks specific performance of it. He also contended that an information memorandum supplied to him during the course of negotiations in respect of the sale on behalf of Zomay was misleading or deceptive because it represented that Mr Hampton, not Zomay, was the vendor of the business. The issue of the correct identity of the vendor was first raised by the solicitors for the respondents in an email dated 22 November 2018, before this proceeding was commenced, in which it was asserted that the agreement was not binding because it wrongly named Mr Hampton, not Zomay, as the vendor.

5    By the end of the trial, counsel for the respondents conceded, as he was bound to, that there was nothing in the point, and that Mr Hampton can be taken to have signed the agreement on behalf of Zomay.

6    Obviously in those circumstances, the court retains jurisdiction to hear the claim for specific performance. See Re Wakim; Ex parte McNally (1999) 198 CLR 511 at 584-588, [136]-[147].

7    The respondents contend that no binding agreement was entered into and, in the alternative, contend that if there was a binding contract it was repudiated by the applicant’s proffer of a draft contract of sale.

8    By the end of the trial, which occupied three days, some of the pleaded issues, and many of the grounds upon which the solicitors for the respondents had originally contended that there was no binding contract, disappeared as a result of appropriate concessions made by counsel for the respondents, Mr Deller.

9    In particular, it was conceded that references in the contract to it being subject to “Pharmacy Board” and “Medicare Australia” approval are to be read as referring to (because the parties intended them to refer to) (respectively):

(1)    the Tasmanian Pharmacy Authority granting such approvals as may be required to permit the applicant lawfully to conduct a pharmacy at the premises under the Pharmacy Control Act 2001 (Tas); and

(2)    the secretary of the Department of Health granting such approvals as may be required under the National Health Act 1953 (Cth) to permit the applicant lawfully to supply pharmaceutical benefits at the premises.

10    Counsel for the applicant, Mr C Gunson SC, who appeared with Mr A Walker, took me to the relevant legislative provisions in considerable detail in his opening, when the respondents still maintained their position that the references to “Pharmacy Board” and “Medicare Australia” approval were uncertain and a basis for finding that there was no binding contract. Now that that submission has been jettisoned (quite properly) it is not necessary to set out in detail the relevant statutory provisions. I will however set out the following.

11    In order to be able to dispense medicines that are subsidised under the pharmaceutical benefits scheme of the Commonwealth, a pharmacist must be approved by the Secretary of the Commonwealth Department of Health (the Secretary) to supply pharmaceutical benefits at particular premises under s 90 of the National Health Act 1953 (Cth) (the NHA). The Secretary must refer an application for approval under s 90 of the NHA to the Australian Community Pharmacy Authority (the ACPA) for consideration. Section 99K(1) of the NHA provides that the functions of the ACPA are to consider applications referred to it under s 90 and to make recommendations as to whether an application under s 90 should be approved and whether (and if so, what) conditions an approval should be made subject to. Subsection 99K(2) requires that, in making a recommendation, the ACPA comply with the relevant rules determined by the Minister under s 99L.

12    The Minister has made rules under s 99L: the National Health (Australian Community Pharmacy Authority Rules) Determination 2018 (Cth) (the Rules). The Rules set out the circumstances in which a pharmacy may be approved under s 90. The Rules were designed with the objectives of providing “a sustainable and viable community pharmacy network (which focuses at least as much on the interests of pharmacy owners as on the community) and access to pharmaceutical benefits (which focuses only on the community)”. See Walkerden v Wodonga Pharmacy Pty Ltd (2015) 230 FCR 243 at 261, [62] and Stambe v Minister for Health [2019] FCA 43 at [30].

13    The ACPA does not have a discretion to recommend or not recommend approval of an application under s 90 of the NHA. If an application complies with the Rules, the ACPA must recommend that the applicant be approved, and, if it does not, the ACPA must recommend that the applicant not be approved.

14    The Secretary may only grant approval if the ACPA has recommended approval. However, the Secretary retains a residual discretion to refuse to grant approval under s 90(3B) of the NHA. The Secretary cannot grant approval under s 90 if the ACPA has recommended that approval not be granted, although the Minister has a broad discretion to substitute the Secretary’s decision under s 90A, but only in circumstances in which the Secretary has refused to grant approval under s 90 on the basis that the application did not comply with the Rules.

15    In this case, the parties are taken to have accepted that Eastlands Shopping Centre has less than 100 other “commercial establishments” (as defined by s 7 of the Rules), so it follows that only one pharmacy may be approved in the shopping centre. See the Rules, sch 1.

16    The requirement for an application under s 90 of the NHA to be referred to the ACPA does not apply to an application for an approval arising out of a change of ownership of a pharmacy situated at particular premises if the change results or resulted from the sale of the pharmacy, and if the pharmacy is to continue to operate at the same premises.

17    A “pharmacist” is defined in s 4 of the NHA to mean “a person registered as a pharmacist or pharmaceutical chemist under a law of a State or Territory providing for the registration of pharmacists or pharmaceutical chemists, and includes a friendly society or other body of persons (whether corporate or unincorporate) carrying on business as a pharmacist.”

18    In Tasmania, pharmacists are registered under the Health Practitioner Regulation National Law Act 2009 (Qld) as adopted by the Health Practitioner Regulation National Law (Tasmania) Act 2010 (Tas) (the National Law (Tasmania) Act). Both the applicant and the second respondent are registered as pharmacists. Prior to the commencement of the National Law (Tasmania) Act pharmacists were registered under Part 3 of the Pharmacists Registration Act 2001 (Tas) which also continued the Pharmacy Board of Tasmania established under s 3 of the Pharmacy Act 1908 (Tas).

19    When the Pharmacists Registration Act 2001 (Tas) was enacted the requirement to register pharmacy premises was not included.

20    Part 6A was inserted into the Pharmacists Registration Act 2001 (Tas) by the Pharmacists Registration Amendment Act 2005 (Tas) and reimposed the requirement for pharmacy premises to be registered by the Pharmacy Board of Tasmania.

21    The Pharmacists Registration Amendment Act 2010 (Tas) (2010 Amendment Act) was part of the package of legislation associated with the National Law (Tasmania) Act. The title of the Pharmacists Registration Act 2001 (Tas) was amended to be the Pharmacy Control Act 2001 (Tas). The new s 6 established the Tasmanian Pharmacy Authority in place of the Pharmacy Board of Tasmania. Part 5A, which requires approval to hold an interest in a pharmacy business, was also inserted by the 2010 Amendment Act.

22    Under the Pharmacy Control Act 2001 (Tas) it is therefore necessary for a person to obtain from the Tasmanian Pharmacy Authority a certificate deeming the person to be eligible to hold an interest in a pharmacy business.

23    An eligibility certificate applies for multiple pharmacy businesses and a person is not required to hold more than one eligibility certificate, although a person cannot hold an interest in more than four pharmacy businesses.

24    The eligibility of Mr Lucas and both respondents to hold an interest in a pharmacy business is admitted in the pleadings.

25    As set out above, it is also necessary under Part 6A of the Pharmacy Control Act for premises from which a pharmacy operates to be registered by the Tasmanian Pharmacy Authority. The Priceline Pharmacy Eastlands premises are registered by the Tasmanian Pharmacy Authority.

26    The regulatory approvals that Mr Lucas would need to obtain, therefore, to operate a pharmacy business at the current premises of Priceline Pharmacy Eastlands are: approval by the Secretary under s 90 of the NHA (which does not require consideration by the ACPA under the Rules) and registration of the pharmacy business premises by the Tasmanian Pharmacy Authority under Part 6A of the Pharmacy Control Act 2001 (Tas).

27    The process for obtaining those two statutory approvals is straightforward. In the case of approval under the NHA, a form needs to be completed and submitted to the Department of Health. The form seeks approval for a new owner under s 90 and at the same time requests cancellation of the existing approval of the former owner under s 98 of the NHA. In the case of approval under the Pharmacy Control Act 2001 (Tas) a form likewise needs to be completed and submitted to the Tasmanian Pharmacy Authority.

FACTS

28    In June or July 2017, Mr Hampton retained Pharmacy Solutions Australia (Pharmacy Solutions), a pharmacy business broker, to assist him in selling Priceline Pharmacy Eastlands. Mr Greg Gibson (Mr Gibson) was a “Pharmacy Business Brokerage Consultant” for Pharmacy Solutions, and was an employee or agent of Pharmacy Solutions.

29    By the end of the trial, there was no dispute that Pharmacy Solutions was the agent of the respondents and that both respondents were bound by his representations.

30    Pharmacy Solutions prepared an “Information Memorandum”. The Information Memorandum contained a “Vendor Acknowledgment” in the following terms:

The vendor acknowledges that they have reviewed and approved this Information Memorandum (IM) and authorise Pharmacy Solutions Australia to provide the IM to potential purchasers of the pharmacy who have signed the appropriate Confidentiality Agreement and have been qualified as a genuine purchaser.

The vendor acknowledges that the information contained in this IM has been provided to Pharmacy Solutions Australia by the vendors and or vendor’s (sic) accountant and provides a fair and true representation of the current operations of the business for sale.

…

The vendor acknowledges that Pharmacy Solutions Australia, as agent for the vendor, accepts no liability for the accuracy of the information contained in this IM.

31    The Vendor Acknowledgement was signed by Mr Hampton.

32    The Information Memorandum also stated: “All enquiries relating to the sale of this pharmacy are to be directed to the agent. Prospective purchasers do not have access to the vendor of the business, staff or the landlord unless the agent gives consent”. (Emphasis in original).

33    The Information Memorandum listed the second respondent as the proprietor of Priceline Pharmacy Eastlands, recorded the sale price as $2,600,000 and as made up of goodwill, furniture and fittings in the sum of $2,076,000 and estimated stock of $524,000.

34    The details of Zomay’s lease were also provided in the Information Memorandum, which explained that: the landlord’s agent is Vicinity Real Estate; the base rent is $443,910 per year; and the lease expires on 28 February 2021.

35    On 10 March 2018 Mr Gibson provided a copy of the Information Memorandum to the applicant.

36    On 26 October 2018 Ms Prue Howe of Pharmacy Solutions sent an email to Mr Hampton, attaching an “Offer to Purchase” together with a request that Mr Hampton sign and date it and return it to Pharmacy Solutions.

37    The Offer to Purchase was in these terms:

Offer to Purchase

I, Warren Lucas and/or Nominee, make the following offer to purchase:

This offer is subject to: -    

1.    Due Diligence of trading figures, accounts and business operations

2.    Finance Approval by bank of purchasers choice

3.    Negotiation of lease suitable to purchaser with Landlord

4.    All negotiations to be conducted through Greg Gibson of Pharmacy Solutions Australia

5.    Pharmacy Board and Medicare Australia approval

6.    Settlement Date    ……/…../……

7.    Other:

38    On 1 November 2018 Mr Hampton signed the Offer to Purchase and sent it by fax to the number provided in the email.

39    Mr Gibson also emailed (copied to Mr Hampton) the Offer to Purchase to Mr Lucas on 2 November 2018. In the email, Mr Gibson proposed to Mr Lucas that: there be no due diligence; that settlement be after Christmas to facilitate a reduction of stock; and that settlement occur on 4 February 2019, with the stocktake to occur on 3 February 2019, or a week earlier.

40    On 2 November 2018 Mr Lucas responded to Mr Gibson’s email (copied to Mr Hampton), as follows: “No due diligence OK but we still require all the business details including statements, dispensary and retail sales reports, payroll reports etc”. Mr Lucas also agreed that he was content with a settlement after Christmas; and proposed a settlement date of 12 February 2019, with a stocktake to occur on 11 February 2019.

41    Mr Lucas attached to his email to Mr Gibson a PDF copy of the Offer to Purchase, signed by him, and dated 2 November 2018, that had previously been signed by Mr Hampton, with the alterations highlighted in bold italics below:

Offer to Purchase

I, Warren Lucas and/or Nominee, make the following offer to purchase:

This offer is subject to: -    

1.    Due Diligence of trading figures, accounts and business operations

2.    Finance Approval by bank of purchasers choice

3.    Negotiation of lease suitable to purchaser with Landlord. Sunset Clause: 28 days from 2/11/18

4.    All negotiations to be conducted through Greg Gibson of Pharmacy Solutions Australia (See Clause 4.1)

5.    Pharmacy Board and Medicare Australia approval

6.    Settlement Date: 12/2/19 or as mutually agreed

7.    Other: See 4.1. Excluding lease negotiations. Lease negotiations are to be kept strictly confidential and between Warren Lucas and/or nominee and the Vicinity Group (Landlord)

42    By email of 3 November 2018 to Mr Lucas, Mr Gibson said: “We will request an initial deposit from you in the middle of next week. It will be 1/3 of the total deposit payable”.

43    Mr Lucas replied to Mr Gibson’s email on 4 November 2018 (to which Mr Hampton was copied) and said:

Before proceeding with a deposit can we please confirm that Jerry Hampton is comfortable with our suggested amendments to the offer? In addition, our usual process is to pay 10% of the purchase price as a deposit, is this acceptable?

44    Counsel for the respondents agreed that the “suggested amendments” referred to in that email meant the additions to the Offer to Purchase made by Mr Lucas (in italicised bold at [41] above) and the related email sent by Mr Lucas on 2 November (set out at [40] above).

45    On 5 November 2018 Mr Gibson replied and said: “I have discussed things with Jerry and he agrees with everything. The deposit of 10% can be paid into our trust account”.

46    Mr Lucas’s case is that at the point at which Mr Gibson, on behalf of the respondents, told Mr Lucas that Mr Hampton agreed with his suggested changes to the terms about due diligence, the dates for settlement and the stock take, there was a binding agreement, because the three essential elements of a concluded agreement were agreed, viz the parties, the subject matter and the price. See Hall v Busst (1960) 104 CLR 206 at 222, per Fullagar J.

47    On 5 November 2018 Pharmacy Solutions provided Mr Lucas with its trust account details for payment of the deposit.

48    On the same day, the applicant’s solicitor, Mr Hamish Rotstein, wrote an email to Mr Gibson as follows:

I refer to the chain email below on which I was copied and confirm that I act for the purchaser in relation to this transaction.

Is the vendor happy for me to prepare the formal contract of sale?

I will be able to send this to everyone in the next 24 hours.

49    Mr Hampton responded immediately by email to Mr Rotstein, with copies to Mr Gibson, Mr Lucas and a number of others who work for the Chemist Warehouse Group, including the CEO, Mr Sam Gance, saying “Vendor is happy to prepare formal contract … Jerry hampton (sic)”.

50    Mr Rotstein responded shortly thereafter: “Thank you for your prompt response. We shall circulate shortly”.

51    Later in the day, Mr Rotstein sent an email to Mr Hampton and to Mr Gibson, copied to Mr Lucas and Mr Gance and others. The attachments to the email were the signed and completed Offer of Purchase and a document entitled “DRAFT Priceline Pharmacy Eastlands – Contract of Sale.pdf”. The email read relevantly as follows:

Thank you for your emails earlier today. I confirm that I act for Warren Lucas and/or nominees, the named purchaser in the binding Offer to Purchase of Price Line Pharmacy Eastlands dated 2 November 2018 (Agreement) (also attached for convenience).

Please find attached my firm’s standard Contract of Sale incorporating the terms of the Agreement and subsequent points as agreed in recent email correspondence between the parties for your review and approval. I am providing you with this Contract at the same time as I am providing it to my client and I reserve my client’s right to amend it further if required.

If the Contract is in order, please do the following:

1.    Print out and complete the attached Contract by inserting the required information where highlighted with “#”, including the list of the plant/equipment/assets in Annexure A, the PBS Approval Number of the Pharmacy and the Vendor’s ABN on page iii (Particulars) of the Contract and sign on page 24 and return the completed Contract to me to commence the formal exchange.

2.    Provide a copy of the Lease for the Business Premises and any other material contracts affecting the Business for my client’s review.

I look forward to hearing from you.

52    It is, for the purposes of deciding this dispute, only necessary to set out the due diligence clause contained in the contract attached to Mr Rotstein’s email. That is because the only basis, in the end, upon which the respondents sought to contend that the proffering of the contract constituted a repudiation of the Offer to Purchase (on the assumption that it was binding) was that it contained a provision relating to due diligence that was fundamentally at odds with that contained in the Offer to Purchase.

53    The due diligence clause is as follows:

4.3 Due Diligence

4.3.1    The Purchaser shall be entitled to undertake and complete a Due Diligence Investigation into all matters of or incidental to the business as the Purchaser may see fit during the Due Diligence Period.

4.3.2    The Vendor or the Vendor’s professional advisers must make available to the Purchaser or the Purchaser’s professional advisers, consultants and agents, within one (1) Business Days written request from the Purchaser, all information in the Vendor’s possession or control which the Purchaser reasonably requires in order to enable the Purchaser to conduct the Due Diligence Investigation within the Due Diligence Period. In addition, the Vendor agrees to complete, and to procure where applicable its professional advisers to complete, any due diligence investigation questionnaire submitted by the Purchaser to the Vendor during the Due Diligence Period, in a complete true and accurate manner. The due diligence questionnaire is to be answered and returned by the Vendor and where applicable its professional advisers within one (1) Business Day of its submission to the Vendor.

4.3.3    The Purchaser may terminate this Contract by notice in writing to the Vendor within three (3) Business Days of the end of the Due Diligence Period if the Purchaser is not satisfied with any aspect or matter relating to the Business at his/her sole and absolute discretion.

4.3.4    If this Contract is terminated pursuant to clause 4.3.3, neither party shall have any claim on or recourse against the other party except for antecedent breach or default and all Deposit monies paid by the Purchaser and all accrued interest on the Deposit monies shall be immediately refunded to the Purchaser in full without any deduction or set off.

4.3.5    All responses given by the Vendor or the Vendor’s professional advisers to the Purchaser or to the Purchaser’s professional advisers in the course of the Due Diligence Investigation to be conducted by the Purchaser and its professional advisors will be true and accurate in all respects. None of that information will be misleading in any material particular, whether by omission or otherwise and where any response is qualified by the expression “so far as the Vendor is aware” or any similar expression that response shall be deemed to include an additional statement that is made or given after due diligence and careful enquiry and that the Vendor has used its best endeavours to ensure that all information given in such response is true and accurate in all respects.

4.3.6    To the best of the knowledge and belief of the Vendor all details relating to the Business and the Assets which would be material for disclosure to a prudent intending Purchaser of the Business and the Assets has now been disclosed to the Purchaser or will be disclosed to the Purchaser during the Due Diligence Investigation (whether or not the Purchaser or the Purchaser’s professional advisers specifically required any such details).

4.3.7    As part of the Due Diligence Investigation the Vendor shall provide to the to the Purchaser a depreciation schedule detailing the current written down values in the Vendor’s financial records of Assets and in the Vendor’s income tax return of the items.

54    There was no immediate response from Mr Hampton or Mr Gibson to the email attaching the contract. On 14 November 2018 Mr Rotstein emailed Mr Hampton and Mr Gibson, copied to Mr Gance, Mr Lucas and others, asking Mr Hampton and Mr Gibson whether they wanted him to circulate final execution copies of the contract of sale for signing by all the parties. Mr Rotstein also said that if the vendor had appointed a lawyer to review the contract “kindly email me his/her details so that I can work with them to finalise the formal documentation for signing”.

55    A week later, and still not having heard anything from either Mr Hampton or Mr Gibson, Mr Rotstein tried again, emailing them as follows:

I refer to my emails below dated 5 and 14 November 2018 to which I have not received a response.

Kindly confirm if the Contract of Sale which I sent you as requested on 5 November 2018 is in order for signing.

If there remains any outstanding issues, please let me know.

56    The deposit was paid on 19 November 2018.

57    On 22 November 2018, Mr Benn Dance of Murdoch Clarke Lawyers, wrote Mr Rotstein an email in which, it is fair to say, he assembled a host of reasons, hardly any of which are now pursued, as to why the Offer to Purchase was not binding. In circumstances where most of the grounds articulated in that email are not now pursued it is not necessary to set out the terms of that email here.

58    On 29 November 2018 Mr Rotstein wrote to Mr Dance, insisting that the Offer to Purchase was binding, and saying, among many other things that are no longer relevant, that “[d]ue diligence, lease and finance conditions have all been satisfied …”. It follows, and counsel for the respondents did not ultimately contend otherwise, that Mr Lucas is taken to have waived each of those conditions, each of which is obviously for his benefit.

59    Further correspondence ensued between the parties’ lawyers, culminating in the issuance of this proceeding by Mr Lucas on 14 January 2019.

The contentions of the parties

The applicant

60    Mr Lucas’s case is straightforward. He says that the Offer to Purchase, containing the changes proffered by him and accepted by Mr Gibson on behalf of Zomay, and signed by both parties, is a binding agreement because it contained the three essential elements of a concluded agreement, viz the parties, the subject matter and the price. At the point that Mr Gibson told Mr Lucas that “everything was agreed”, the parties were bound immediately and exclusively by the terms which they had agreed upon, whilst expecting to make a further contract in substitution for the agreed terms contained in the Offer to Purchase, containing, by consent, additional terms – that is, the category of contract dubbed the “fourth” category of agreements to contract described in Masters v Cameron (1954) 91 CLR 353 at 360-361.

61    As Sackar J explained in Damcevski v Demetriou [2018] NSWSC 988 at [83], “[i]f the terms of such a document indicate that the parties intended to be bound immediately, effect must be given to it. Construction of a document may make it sufficiently clear that the parties were content to be bound immediately by the terms to which they had agreed, notwithstanding they contemplated further documentation”, citing Masters v Cameron (1954) 91 CLR 353 at 360 (Dixon CJ, McTiernan and Kitto JJ) and Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd (2000) 22 WAR 101 at 110 (Ipp J).

62    As McHugh JA said in GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 at 634 (in a passage also cited by Sackar J in Damcevski v Demetriou [2018] NSWSC 988 at [84]):

However, the decisive issue is always the intention of the parties which must be objectively ascertained from the terms of the document when read in the light of the surrounding circumstances … If the terms of a document indicate that the parties intended to be bound immediately, effect must be given to that intention irrespective of the subject matter, magnitude or complexity of the transaction.

Even when a document recording the terms of the parties’ agreement specifically refers to the execution of a formal contract, the parties may be immediately bound. Upon the proper construction of the document, it may sufficiently appear that “the parties were content to be bound immediately and exclusively by the terms which they had agreed upon whilst expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms” …

(Citations omitted)

63    Sackar J in Damcevski v Demetriou [2018] NSWSC 988 at [86] continued:

As Walsh J (with whom Mason J agreed) had earlier pointed out in Godecke v Kirwan (1973) 129 CLR 629 at 639, an agreement which obliges a subsequent agreement to be entered into may contain covenants for example in the new agreement not included in the original contract. In expressing his agreement with the South Australian decision of Bray CJ in Powell v Jones [1968] SASR 394, Walsh J accepted that there was no reason in principle for holding that there cannot be a binding contract even if some matter is left to be determined by one of the contracting parties. His Honour took the view that because he was there looking at a clause which permitted the insertion of covenants and conditions (not inconsistent with those contained in the offer), he thought any new terms should also be limited by reference to the reasonableness of requiring the inclusion of those covenants and conditions. He thought that the clause meant that what was required must be reasonable in an objective sense and in the event that there was a dispute it was always a matter for a court to decide.

The respondents

64    The respondents’ submissions are as follows.

65    First, on the question of whether the Offer to Purchase is binding, Mr Deller contended in his oral opening submissions that:

(a)    it is not binding because it does not say in terms that it is;

(b)    when Mr Gibson told Mr Lucas that Mr Hampton “agreed with everything” that “when read in context [is] not signifying agreement to an offer to purchase”;

(c)    “the offer…was uncertain because the parties to the offer to purchase remained uncertain at the time…at the time that the offer to purchase was drafted and is at 5 November said to have been binding, there was no nominee [nominated pursuant to the and/or nominee clause], and Mr Lucas was part of the mix … who he was signing on behalf of and whether or not there would be a nominee is an issue that needs to be dealt with …”;

(d)    the Offer to Purchase “was at all times … headed “Offer to Purchase …”;

(e)    Mr Hampton never signed the Offer to Purchase in the final form – he only signed it in the original version and that “may have had different consequences”;

(f)    Mr Lucas’s amendments to the Offer to Purchase at the time of his signing the documents meant that what was said to be his acceptance was in fact a counteroffer;

(g)    when Mr Gibson sent his 5 November email that “purported to constitute acceptance of the [offer], [the PDF of the Offer to Purchase] was not included” …; and

(h)    at the time the Offer to Purchase was entered into “it wasn’t intended to be legally binding because there was more to be negotiated …”.

66    Secondly, the respondents contend that even if the agreement is binding, the proffer of the draft contract of sale containing the due diligence clause set out at [53] above was so unreasonable or inconsistent with the terms of the agreement that it constituted a repudiation of it. (As I mentioned above, Mr Deller sought to rely on any number of other clauses in the draft contract, but after Mr Gunson pointed out the fact that the respondents’ defence was limited to the due diligence and finance clauses, and that the conditions had been waived by Mr Lucas in any event, he ultimately agreed that the only point he wished to, or could, run in that regard was the due diligence clause).

67    The respondents’ written closing submission contends that Mr Lucas repudiated the agreement because the draft contract of sale included the due diligence clause, set out above, which provides “extensive [due diligence] rights (including the right to terminate) which was the exact opposite” of the clause contained in the agreement that due diligence be limited to disclosure “of trading figures, accounts and business operations”. It was further submitted that “[t]his is so, even if the agreement was only sent in draft – the [due diligence] clause ought never to have been included because it was expressly agreed that there would be no [due diligence]. This conduct, it is alleged “showed the applicant was not willing to perform the … agreement according to its terms”. On those grounds it was submitted that “the applicant’s conduct by including the [due diligence] rights in the Contract of Sale and pressing for that document to be executed was repudiatory” and that “the second respondent was entitled to terminate the … agreement as was lawfully done”.

68    Thirdly, the respondents contend, albeit faintly, that the terms of the agreement are too uncertain to enforce.

69    Fourthly, they contend that, as a matter of discretion, an order for specific performance should not be made in the exercise of the court’s discretion because damages would be an adequate remedy.

consideration

The Offer to Purchase is binding

70    In my view, the Offer to Purchase is clearly an agreement that falls within the so-called fourth category of Masters v Cameron. That is to say, the parties intended to be bound immediately, notwithstanding that they contemplated the need for further documentation. I cannot, with respect, accept any of the propositions relied on to the contrary by the respondents. Taking each in turn.

71    First, it is contended that the agreement is not binding because it does not say in terms that it is. That submission cannot be accepted. It amounts to saying that a contract can only be binding if it says so expressly. Acceptance of that notion would wreak havoc on the jurisprudence of the interpretation of contracts.

72    Secondly, it is contended that, when Mr Gibson told Mr Lucas that Mr Hampton he “agreed with everything”, that when read in context it is not signifying agreement to an offer to purchase. I also cannot accept that submission. It is as plain as a pike staff that Mr Gibson, on behalf of the respondents, agreed to each of the changes proposed by Mr Lucas in his email and included in the Offer to Purchase.

73    Thirdly, it is contended that at the time that the Offer to Purchase was drafted, and at 5 November, there was no nominee nominated pursuant to the and/or nominee clause, and because Mr Lucas was “part of the mix”, who he was signing on behalf of and whether or not there would be a nominee “is an issue that needs to be dealt with”. I cannot accept that contention either. The simple fact is that Mr Lucas was the purchaser, and unless and until a nominee is substituted, he remains so. There is no issue “that needs to be dealt with”.

74    Fourthly, it is contended that the Offer to Purchase was at all times headed “Offer to Purchase”. And of course it was. But that fact cannot possibly go to the question of what the parties objectively intended in all the circumstances.

75    Fifthly, it is contended that Mr Hampton never signed the Offer to Purchase in the final form – he only signed it in the original version and that “may have had different consequences”. In the absence of any indication of what those circumstances might be, I must reject that contention too.

76    Sixthly, it is contended that the effect of Mr Lucas amending the Offer to Purchase at the time of his signing it meant that it should be construed as a counteroffer. In circumstances where Mr Hampton clearly confirmed in subsequent emails that he agreed to the amendments, whether or not it was a counteroffer is irrelevant.

77    Seventhly, it is contended that when Mr Gibson sent his 5 November email the PDF of the Offer to Purchase was not included. That circumstance is wholly irrelevant and I reject the contention.

78    Eighthly, it is contended at the time the Offer to Purchase was entered into it was not intended to be legally binding because there was more to be negotiated. I reject that contention. That is the point of the fourth category of Masters v Cameron. The fact that “there is more to be negotiated” of itself is not a ground for declining to recognising an agreement as falling within the category, because it is necessarily so.

Mr Lucas did not repudiate

79    I also cannot accept the respondents’ contention that the proffering of the draft contract of sale constituted an act of repudiation. There are myriad reasons why that is so, namely:

(1)    Mr Rotstein, Mr Lucas’s lawyer, undertook to prepare, with Mr Hampton’s assent, a draft contract of sale, using his standard form document;

(2)    Mr Hampton agreed that he and/or his agent would review the draft;

(3)    Mr Rotstein then, as he said he would, sent out a “DRAFT” contract of sale, asking respondents or their agent for any suggested changes to it;

(4)    when he failed to elicit any response from Mr Hampton or Mr Gibson, on 14 November 2018 Mr Rotstein asked them whether they wanted him to circulate final execution copies of the contract of sale for signing by all the parties and said that if they had appointed a lawyer to review the contract “kindly email me his/her details so that I can work with them to finalise the formal documentation for signing”; and

(5)    when that got no response either, Mr Rotstein had another go a week later, writing to Mr Hampton and to Mr Gibson asking whether they had “any remaining issues”.

80    It is, with respect, difficult to posit a case that less resembles repudiation. It cannot possibly be that in proffering a draft in such circumstances, which make clear that Mr Rotstein was not necessarily wedded to a word of it, that he evinced an intention on his client’s part no longer to be bound by the (binding) Offer to Purchase. I accordingly reject the respondents’ contention that Mr Lucas repudiated the agreement.

The agreement is not uncertain

81    As I said above, this contention was only faintly made. It also must be rejected. The Offer to Purchase records all the essential terms necessary for a binding agreement. In the absence of a second agreement containing additional terms, the law supplies them. See Hall v Busst (1960) 104 CLR 206 at 222, per Fullagar J.

Damages is not an adequate remedy

82    The pharmacy at Eastlands has a special and singular attraction – it is the sole pharmacy, and remains the sole pharmacy under the existing regulatory regime, in the largest shopping centre in Tasmania. There is no reason at all why Mr Lucas should not be entitled to seek specific performance of the agreement to which the parties are bound, and in respect of which Mr Lucas has paid a 10% deposit.

83    During the course of his oral closing submission, counsel for the respondents sought to contend that uncertainties about whether Mr Lucas can negotiate a new lease in some fashion militate against ordering specific performance. But that condition, having being waived, is irrelevant, and in any event, I did not understand the submission to envisage difficulties that cannot be the subject of supervision of the court, pursuant to the liberty to apply, for which I shall provide.

Email correspondence said to constitute an “admission against interest”

84    Counsel for the respondents sought to tender some email correspondence from Mr Gance, who is a senior executive of the Chemist Warehouse Group. It was submitted that the emails constituted an “admission against interest” because in one case Mr Gance told the real estate agents acting for the owner of the pharmacy premises that Chemist Warehouse (by which Mr Lucas is employed) that he had “an option to purchase” the pharmacy and in another recorded some agreement between themselves that “if Priceline were to purchase this store, the rent would remain place.”

85    I reject the tender. Assuming in the respondents’ favour that Mr Gance is relevantly Mr Lucas’s agent, the first supposed admission is contradicted by a later assertion in another email from Mr Gance that “[w]e have a signed Contract of purchase … and are pursuing the vendor ro complete sale with us (currently with lawyers). The vendor is happy for the sale with us to proceed, but Priceline trying to block sale”.

86    As to the statement that “if Priceline were to purchase this store, the rent would remain place”, I struggle to know what it means, let alone how it constitutes an admission against interest.

87    In any event, counsel for the respondents had the opportunity to explore these matters with Mr Lucas in cross-examination but he did not.

88    I thus decline to admit the emails (marked MFIR1 and MFIR2) into evidence.

CONCLUSION

Appointment of administrator

89    On 29 May 2019, I was informed that an administrator had that day been appointed to Zomay. In those circumstances, and noting the operation of s 440D of the Corporations Act 2001 (Cth), I will not yet make the following declaration and orders (but would do so had an administrator not been appointed):

Declaration

(1)    The respondents are bound by the agreement for the sale of the pharmacy business known as Priceline Pharmacy Eastlands (being situated at Shop G017, Eastlands Shopping Centre, 26 Bligh Street, Rosny Park in the State of Tasmania (the premises)) to the applicant made on 5 November 2018 on the terms alleged in paragraphs 4 to 8 (inclusive) of the statement of claim filed on 14 January 2019 (the agreement).

Order

(1)    The respondents specifically perform the agreement.

(2)    Within 21 days the respondents do all things necessary and provide the applicant with all such forms, documents and information as is necessary, for the applicant to procure from:

(a)    the Tasmanian Pharmacy Authority such approvals as may be required to permit the applicant lawfully to conduct a pharmacy business at the premises under the Pharmacy Control Act 2001 (Tas); and

(b)    the secretary of the Commonwealth Department of Health (including via his or her Medicare delegate) such approvals as may be required under the National Health Act 1953 (Cth), including in particular s 90, to permit the applicant lawfully to supply pharmaceutical benefits at the premises.

(3)    Within 21 days of receipt by the applicant from:

(a)    the Tasmanian Pharmacy Authority of such approvals as may be required to permit the applicant lawfully to conduct a pharmacy business at the premises under the Pharmacy Control Act 2001 (Tas); and

(b)    the secretary of the Commonwealth Department of Health of such approvals as may be required under the National Health Act 1953 (Cth), including in particular s 90, to permit the applicant lawfully to supply pharmaceutical benefits at the premises,

the applicant is to pay to the first respondent the sum of $1,700,000 together with an additional sum up to a maximum amount of $500,000 representing the stock of Priceline Pharmacy Eastlands at valuation, such sum to be calculated in conformity with paragraph 5 of the statement of claim filed 14 January 2019.

(4)    The parties have liberty to apply.

(5)    The respondents pay the applicant’s costs of the proceeding.

90    I will only make order 4. The administrator and the parties can take advantage of the liberty to apply to re-list the proceeding at their option. Cf Curnow Consulting Pty Ltd v JPD Media and Design Pty Ltd t/a Durie Design (No 3) [2018] NSWSC 827 at [11]-[12] and [88]-[89].

Associate:

Dated:    4 June 2019