FEDERAL COURT OF AUSTRALIA

PSC AMGI WSC Pty Ltd v J&P Capital Insurance Pty Ltd [2025] FCA 1057

ORDERS

THE COURT ORDERS THAT:

1.    The applicants' interlocutory application dated 20 May 2025 is allowed.

2.    The respondents' interlocutory application dated 4 June 2025 is refused.

3.    There be judgment for the applicants.

4.    There be a declaration that the respondents are not entitled to the payment of the Settlement Sum referred to in the Deed of Settlement between the applicants and the respondents made on 25 March 2025 by exchange of counterparts.

5.    The respondents do take all steps to effect the prompt transfer to the applicants (or such of them as is notified by the solicitors for the applicants), including all steps required to port or register as the case may be, each of (a) the four mobile phone numbers specified in the Deed of Settlement; (b) the email address domain '@jpcapitalinsurance.com.au'; and (c) the website operated by the first respondent, including the domain name www.jpcapitalinsurance.com.au.

6.    There be liberty to the applicants to apply for further orders to give effect to order 5.

7.    The respondents do pay the applicants' costs of the interlocutory applications to be assessed as one set of costs, if not agreed.

8.    Save as provided for in order 7, there be no order as to the costs of the proceedings.

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

REASONS FOR JUDGMENT

COLVIN J:

1    In September 2023, a subsidiary of PSC Insurance Group Limited entered into an agreement to purchase from J&P Capital Insurance Pty Ltd its general insurance broking business and certain associated assets. Various issues arose as to the performance of the agreement. One issue concerned whether certain assets had been transferred as required by the agreement.

2    In November 2023, proceedings were commenced in this Court against J&P Capital, Mr Jason Prasad and Ms Zaheera Khan in which it was alleged that there had been a breach of the agreement by J&P Capital in that, amongst other things, it had failed to facilitate the transfer of certain assets to PSC AMGI WSC Pty Ltd, a subsidiary of PSC Insurance.

3    On 25 March 2025, PSC AMGI and another subsidiary of PSC Insurance (together, the Applicants), as well as J&P Capital, Mr Prasad and Ms Khan (together, the Respondents) entered into a deed of settlement and release (Deed) in respect of the dispute the subject of the proceedings. In due course it will be necessary to refer to the precise terms of certain provisions of the Deed. At this point it is sufficient to observe that the Deed provided for the transfer of the 'Remaining Assets' to the Applicants by no later than 7 days after the date of the Deed and for the payment of a Settlement Sum of $80,000 by the Applicants to the Respondents no later than 7 days after the Respondents transferred the Remaining Assets to the Applicants.

4    Importantly for present purposes, the Deed included a provision to the effect that the Respondents would forfeit their entitlement to be paid the Settlement Sum should they default in transferring the Remaining Assets in accordance with the clause requiring such transfer within 7 days after the date of the Deed.

5    Issues have arisen concerning the performance of the Deed. The Applicants claim that the Remaining Assets were not transferred to them in time. They claim that, in consequence, the Respondents have forfeited their entitlement to the Settlement Sum and the Applicants are entitled to move for judgment. They say that there remain things to be done to complete the transfer of the Remaining Assets. The Respondents claim that they were only obliged to do what they could to transfer ownership of the Remaining Assets. They say that they performed that obligation within time or there is an estoppel that operates to prevent the Applicants from claiming that they have breached the transfer obligation. They say also, that a failure to perform within 7 days only gave rise to a right to terminate the Deed, not a right to forfeit the payment of the Settlement Sum and insist upon further steps being taken by the Applicants. Belatedly, they also advance a claim that the provision of the Deed providing for the forfeiture of the Settlement Sum is void as a penalty. Relying on each of those alternatives, they say that they are entitled to payment of the Settlement Sum which has not been paid.

6    The Applicants seek orders for judgment to be entered as provided for in the Deed and for the costs of the application to enter judgment as well as orders requiring the transfer of the Remaining Assets. The Respondents seek judgment against the Applicants in the sum of $80,000. The competing interlocutory applications were heard together.

7    It is common ground that the date that was 7 days after the date of the Deed was 1 April 2025 and that the Settlement Sum has not been paid to the Respondents.

8    In the Deed, the term 'Remaining Assets' is defined in the following way:

(i)    phone numbers: [four specified mobile phone numbers] (including the current SIM cards for each of those phone numbers);

(ii)    the email address domain '@jpcapitalinsurance.com.au'; and

(iii)    ownership of the website operated by J & P, including the domain name www.jpcapitalinsurance.com.au.

9    The Respondents seek to draw a distinction between what was required to transfer the SIM cards and what was required to transfer the rest of the Remaining Assets, being intangible property, namely the rights to the phone numbers, email address domain and website (including domain name). They say that 'transfer' of the Remaining Assets was effected on 1 April 2025 because it was clear that the Applicants owned the assets by that date. They say that they did everything that they could do without action being taken by the Applicants. They also say that there is a deficiency in the evidence led by the Applicants as to what is required to pass ownership in the intangible property. In particular, it appears that they claim that it has not been demonstrated by the Applicants that there was anything more that the Respondents were required to do in order to transfer the intangible property. The Applicants claim that there are further steps to take before the Applicants are recognised as being entitled to exercise the rights to the Remaining Assets by the relevant third parties who confer those rights.

Issues for determination

10    Accordingly, the following issues arise for determination:

(1)    On the evidence, what was required, in fact, for the Applicants to be able to exercise the rights to the Remaining Assets?

(2)    On the proper construction of the Deed, what was required to be done by the Applicants to perform the obligation to transfer the Remaining Assets to the Applicants?

(3)    Did the Respondents perform the obligation to transfer within time?

(4)    If no to (3), are the Applicants estopped from denying that the Respondents performed the obligation to transfer within time?

(5)    Subject to the answer to (6), if no to (3) and no to (4), what are the consequences, if any, of the failure to perform the obligation?

(6)    Would the forfeiture of the Settlement Sum in accordance with the terms of the Deed be a penalty?

(7)    Taking account of the answers to (1) to (6), what is the appropriate relief?

Issue (1): On the evidence, what was required, in fact, for the Applicants to be able to exercise the rights to the Remaining Assets?

11    Affidavits of the solicitors involved in arranging the transfer of the Remaining Assets were received without objection. There was no request to cross-examine. I will refer to the relevant communications as having passed between the Applicants and the Respondents, noting that, in fact, all communications were between their respective lawyers. Some of the communications were marked without prejudice, but all were received without objection.

12    In what follows, I will deal with the overall chronology, some of which is relevant to the resolution of later issues.

13    As to the steps that were taken to perform the obligation to transfer the Remaining Assets, the relevant evidence was as follows:

(1)    By 21 March 2025, the Applicants had executed their counterparts. On that date, the Applicants sent an email to the Respondents which included the following:

I confirm that we now hold our clients' executed counterparts of the Deed. Noting that the exchange of counterparts will enliven your clients' obligation to transfer all of the Remaining Assets within 7 days pursuant to clause 2.2, and your clients may need to make additional arrangements to facilitate the transfer of the Remaining Assets within the required timeframe, could you please confirm when you are ready to exchange counterparts?

For the purposes of your clients providing the SIM cards to PSC via express post upon execution of the deed, the address details for PSC's nominee are set out below:

Attn: [name of contact]

PSC Insurance Group Limited

[Sydney office address]

(2)    Counterparts of the Deed were exchanged on 25 March 2025.

(3)    It is common ground that ownership of three of the phone numbers was transferred to the Respondents' chosen IT provider on about 25 March 2025 and the fourth phone number was subsequently transferred to the IT provider.

(4)    On 26 March 2025, the Applicants sent an email to the Respondents which provided contact details 'for an additional nominee' for the purposes of transferring the Remaining Assets to the Applicants. The email asked for confirmation once the assets had been transferred. The address for the additional nominee was the same as that which had been given for 'PSC's nominee'.

(5)    On 1 April 2025, the Applicants sent an email to the Respondents in the following terms:

Further to your call with [Applicants' solicitor] earlier today, I understand your clients are couriering the SIM cards to my clients' representative and have arranged an IT company to assist with the website and domain transfer.

Transfer of phone numbers

I anticipate there will be a process to undertake to transfer and/or port the phone numbers from the current account holders to PSC, which may require verification of identity by photo ID. For each of the phone numbers, could you please advise the Telco, account name(s), date(s) of birth, address(es) and other information and documents that will be required?

Please also provide courier details and an ETA if possible as this will assist our clients to progress the transfer in a timely manner.

Transfer of website and domain

I suggest this may be best dealt with by the parties' respective IT personnel. Could you please advise contact details of your clients' IT company?

We look forward to hearing from you.

It can be seen that, as to the phone numbers, the email anticipated both the physical delivery of the SIM cards as well as the provision of details and 'other information and documents' to transfer or port the phone numbers. These were all steps to be taken by the Respondents. As to the transfer of the website and domain, the email anticipated cooperation between IT personnel for each of the Applicants and the Respondents.

(6)    After that, on the same day, being the last day provided for by the Deed, the Respondents sent an email to the Applicants at approximately 5.50 pm Sydney time which said:

We confirm that we are couriering the SIM cards to your clients' representative and have arranged with our IT company to assist with the website domain transfer. We confirm the courier delivery has arrived this afternoon at the following address to deliver the sim cards:

Attn: [name of additional nominee]

[Address in Sydney for additional nominee, as notified by the Applicants]

We further confirm that there is a process to undertake the transfer of the phone numbers, and our IT specialist will be able to assist with this process and provide further information in due course. For both the transfer of the sim cards and the transfer of the website domain please contact our IT representative [name redacted] via email at [email address redacted] after receiving the sim cards.

If you require any further clarification, please contact our office.

Significantly, the email contemplated the physical delivery of the SIM cards. Otherwise, it contemplated that the Respondents' IT specialist would provide information and assist 'in due course' with the transfer of the phone numbers. Further, as to the transfer of the SIM cards and the transfer of the website domain the Applicants were directed to contact the Respondents' IT specialist at a specified email address 'after receiving the sim cards' (emphasis added). So, the performance proposed by the Respondents involved physical delivery of the SIM cards by courier followed by contact with the Respondents' IT specialist to obtain further information and assistance as to transfer of the intangible property.

(7)    There is no dispute between the parties that the statement to the effect that the SIM cards had been delivered was not correct. Rather, at approximately 5.50 pm Sydney time on the same day, someone instructed by the Respondents to do so, arrived at the specified address to deliver the SIM cards but they could not access the floor of the building at that hour of the day.

(8)    Just over an hour later (at 6.52 pm Sydney time) an email was sent by the Respondents to the Applicants. It said:

Further to the below [being the email sent at approximately 5.50pm] and my conversation with [the Applicants' solicitor]. Our courier will re-attempt delivery tomorrow morning.

(9)    At 7.06 pm Sydney time the following email was sent by the Applicants to the Respondents:

I refer to the below emails and my call with [the Respondents' solicitor] a short time ago, from which I understand that the courier arrived at my clients' offices at approximately 6pm (AEDT) but was unable to deliver the SIM cards as the office was closed.

I confirm [the Applicants' named additional nominee] has left the office and is not available to receive an after-hours delivery of the SIM cards. Further, I understand that as the building closes at 6pm, access to Level 24 closes off after this time. As such, the delivery will need to occur tomorrow.

I will inform my client that the courier will attempt delivery tomorrow morning. I would be grateful if you could provide an ETA (if possible) and confirmation once delivery has been effected.

I will otherwise pass on [the IT specialist's] details to my client for the purposes of arranging the transfer of the website, domain and phone numbers.

(10)    It is common ground that the SIM cards were physically delivered to the specified address in Sydney the following day.

(11)    On 3 April 2025, the Applicants sent a letter by email to the Respondents which said, amongst other things:

(a)    the Respondents had defaulted;

(b)    the Respondents had forfeited their right to the Settlement Sum;

(c)    the SIM cards had been received;

(d)    the SIM cards that were delivered were said to not comply with the Deed because they were not the SIM cards that were 'current' as at the date of the Deed (though they were identified as being the SIM cards for each of the four phone numbers);

(e)    the Applicants were entitled to apply for judgment to transfer the Remaining Assets; and

(f)    the Applicants' rights were otherwise reserved.

(12)    On 4 April 2025, the Respondents sent a letter by email in response which said, amongst other things:

(a)    there was no obligation to deliver the SIM cards to the Applicants' offices and the Applicants 'could have easily taken possession of the SIM cards from [the Respondents'] office';

(b)    there was no-one at the Applicants' offices in Sydney to take delivery when there was an attempt to deliver before 6.00 pm Sydney time;

(c)    the SIM cards were delivered on 2 April 2025; and

(d)    there had been a failure by the Applicants to perform its obligation under the Deed to carry out all things necessary to give effect to the transfer of the Remaining Assets.

(13)    The letter of 4 April 2025 also provided the following information under the heading 'Transfer of the Remaining Assets':

For completeness we provide further information and instruction as to the transfer of the Remaining Assets with our IT Company.

The Domain will need to be transferred, however, the transfer does not change the domain ownership. The Registrant details need to also be updated, and the receiving host should have a process. The further details of the domain are below:

[A list of details including passwords were provided for the domain jpcapitalinsurance.com.au]

The phone numbers are all registered against [name redacted], they will need a change of ownership performed. The receiving party will need to get 4 prepaid SIM cards, setup the corresponding account and activate each with temporary numbers. Once this has been completed, the IT company will need to initiate a change of ownership at this time we will need to either setup a conference call or Telstra can contact the receiving account holder to confirm and verify details to transfer.

14    I infer from the fact that the above information was provided by the Respondents to the Applicants on 4 April 2025 after a dispute had emerged concerning performance of the obligation to transfer the Remaining Assets as required by the Deed that the information recorded in the letter was what was considered by the Respondents to be accurate information about what was still required to be done in order to perform a 'change of ownership' for the Remaining Assets.

15    I observe that the email communications on 1 April 2025 from the Respondents also proceeded on the basis that there would need to be information provided by the Respondents to the Applicants after the SIM cards had been delivered and steps were taken by the Respondents' IT specialist in order to effect transfer of the website domain. This provides further support for the drawing of the above inference.

16    On that basis, I find that, in order to be able to use the phone numbers, the Applicants needed to be in possession of SIM cards for those phone numbers. Further, the transfer of the rights to the phone numbers required some form of dealing with Telstra. There was also a need for the details of the registration of the domain to be updated using information that was not available to the Applicants until 4 April 2025. These matters reflect the nature of the property included in the definition of the Remaining Assets. It includes choses in action of a kind that depend upon being able to assert rights as against third parties, being those who maintain the registration of those who are entitled to the phone numbers or the domain name (as the case may be).

17    Further, I consider that the common day to day experience of modern life in making arrangements concerning mobile phone numbers and domain names enables me to take judicial notice of what is required in order to secure the rights to intangible property of that kind. In the case of the phone number, it is necessary for ownership to be ported. In the case of domain names, there must be a change in the details maintained by the registrar for the domain name.

18    Accordingly, I do not accept the submission for the Respondents to the effect that the Applicants had not established such matters on their application.

Issue (2): On the proper construction of the Deed, what was required to be done by the Applicants to perform the obligation to transfer the Remaining Assets to the Applicants?

19    The Deed is a commercial instrument. In determining the meaning of its terms, it is necessary to ask what a reasonable businessperson would have understood the terms used by the parties to mean: Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 at [35] (French CJ, Hayne, Crennan and Kiefel JJ); and Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited [2015] HCA 37; (2015) 256 CLR 104 at [46]-[52] (French CJ, Nettle and Gordon JJ). The submissions advanced by the parties did not rely upon any aspect of the surrounding circumstances beyond general references to the Deed as being the terms upon which the parties resolved the dispute the subject of the proceedings brought in this Court. That aspect is evident from the recitals to the Deed.

20    The key clause of the Deed is cl 2. It is necessary to consider the whole of its terms. It provides:

2.    Settlement

2.1    Without admission as to liability or concession as to facts, the Respondents agree to transfer to the Applicants the Remaining Assets in full and final settlement of the Claims, the Dispute, and the Proceedings.

2.2    The transfer of the Remaining Assets is to occur by no later than 7 days after the date of this Deed and time is of the essence with respect to the transfer of the Remaining Assets.

2.3    The Applicants acknowledge and agree that they must complete and execute all documents or actions required to give effect to the transfer of the Remaining Assets in accordance with clause 2.1.

2.4    Should the Respondents default in transferring the Remaining Assets to the Applicants in accordance with clauses 2.1 and 2.2:

a)    the Respondents forfeit their entitlement to be paid the Settlement Sum in accordance with clause 2.6; and

b)    the Applicants are entitled to apply for judgment to be entered in the Proceedings for the transfer of the Remaining Assets.

2.5    Following the transfer of the Remaining Assets the Parties shall execute and file in the Federal Court of Australia a Form 48 notice of discontinuance for the discontinuance of the Proceedings with no order as to costs.

2.6    Without admission as to liability or concession as to facts, the Applicants agree to pay to the Respondents the Settlement Sum in full and final settlement of the Claims, the Dispute, and the Proceedings.

2.7    The Settlement Sum is to be paid by no later than 7 days after the Respondents have transferred the Remaining Assets to the Applicants in accordance with clause 2.1 and time is of the essence with respect to the payment of the Settlement Sum. For the avoidance of doubt, the Applicants are not obliged to make payment of the Settlement Sum to the Respondents unless and until the Remaining Assets have been transferred to the Applicants.

2.8     Payment of the Settlement Sum must be made into the following trust account:

[Details not reproduced]

2.9    The Respondents acknowledge that payment of the Settlement Sum pursuant to clause 2.6 will extinguish any right to the commission payable pursuant to clause 4 and clause 8 of the BSP Agreement.

2.10    Should the Applicants default in payment of the Settlement Sum in accordance with clause 2.6:

a)    the Applicants are to remedy the default payment within 5 business days; and

b)    in the event the Applicants do not remedy the default within 5 business days, the Respondents are at liberty to commence proceedings to enforce payment of the Settlement Sum, the Applicants are not at liberty to file a defence in these proceedings, and the Respondents are entitled to proceed forthwith to have default judgment entered against the Applicants for the Settlement Sum plus any additional interest accrued and costs associated with initiating the proceedings and obtaining that judgment, and to enforce that judgment.

2.11    The Parties are to otherwise each bear their own legal costs incurred to date in the Proceedings and their legal costs incurred in the review and execution of and complying with this Deed.

[Clause 2.12 omitted]

21    The Respondents advanced a number of submissions as to why the Applicants could not forfeit the payment of the Settlement Sum under cl 2.4 in the events which had occurred.

First Claim, the only right of the Applicants upon default in performance by the Respondents of the 'time is of the essence' aspect of the obligation to transfer was to terminate

22    The Respondents advanced a submission to the effect that if there was a failure by the Respondents to transfer the Remaining Assets within 7 days after the date of the Deed, then the only breach was of the provision that time was of the essence and the only remedy for that breach was the exercise of an election to terminate the Deed (which had not been exercised). The submission relied upon the language in cl 2.7 to the effect that the Applicants are not obliged to make payment of the Settlement Sum to the Respondents unless and until the Remaining Assets have been transferred to the Applicants. It sought to read the terms of cl 2.2 together with cl 2.7 as providing, in effect, that the agreed mechanism for the Applicants to exercise if there was a delay in transfer of the Remaining Assets was to withhold the Settlement Sum until the Remaining Assets had been transferred. Considered in the context of the language of cl 2.7 it was said that the only right that the Applicants could exercise if there was a failure to perform within the 7 days as required was to terminate the Deed. The language 'time is of the essence' was said to be language that pointed to the creation of a right to terminate.

23    For the following reasons, I do not accept those submissions.

24    It may well be the case that the Applicants would have a common law right to terminate upon a failure to transfer the Remaining Assets within 7 days after the date of the Deed because the Deed provided for time to be of the essence of the performance of that obligation. Much would depend upon whether the agreed remedies provided for by the Deed manifested an intention to exclude common light rights of that kind. However, the availability of that common law right would not be a reason to construe the clear and express terms of cl 2.4 (which operates upon default in performance of cl 2.2) as not applying even though there had been such default. Importantly, it is the contractual right conferred by cl 2.4 that the Applicants seek to enforce. The terms of cl 2.4 are clear. They are directly inconsistent with the construction for which the Respondents contend.

25    Further, the language in cl 2.7 is expressly included for 'the avoidance of doubt'. It is the structure of cl 2.6 and cl 2.7 that introduces doubt. That is because cl 2.6 provides for an obligation to pay the Settlement Sum and cl 2.7 separately provides for the time for payment. Consequently, when cl 2.7 specifies the time for the performance of the obligation to pay the Settlement Sum (which is set by reference to the date of transfer of the Remaining Assets), an issue arises as to whether there remains an obligation to pay the Settlement Sum even where there is a failure to transfer the Remaining Assets in accordance with cl 2.2, that is within 7 days of the date of the Deed such that the only remedy for delay is to withhold payment of the Settlement Sum and claim damages for the breach of cl 2.7. Of course, any such construction would be inconsistent with the clear terms of cl 2.4. In my view, the additional words in cl 2.7 that are expressed to be for the avoidance of doubt are simply making clear that the obligation to pay the Settlement Sum is tied to the performance by the Respondents of the obligation to transfer the Remaining Assets. I would say there is no real doubt about that given the terms of cl 2.4 and the fact that the time for performance of the obligation to pay the Settlement Sum is set by reference to the date when the Remaining Assets are to be transferred. However, there is a possibility that the obligation to pay the Settlement Sum might be construed as an obligation that is separately enforceable by the Respondents even if they have not complied with cl 2.2. The additional words in cl 2.7 perform the function of removing any possibility for doubt in that regard. The operation of those words in that way is consistent with and reflects the clear terms of cl 2.4 which manifest an intention that a failure to perform the obligation to transfer the Remaining Assets within 7 days of the date of the Deed would lead to the consequences expressed in cl 2.4.

26    The Respondents submitted that cl 2.4 did not trigger immediately upon what was described as a 'time of the essence' breach of the obligation to transfer the Remaining Assets. There is no foothold in the language of the clause for the suggestion that cl 2.4 was only triggered if there was some form of ongoing breach of cl 2.4 and that otherwise the only remedy for failure to transfer within 7 days of the date of the Deed was termination at common law.

27    It is wrong to view the terms of cl 2.7 as conferring some form of right to withhold payment in the event of a failure to transfer the Remaining Assets within 7 days, which was a submission advanced for the Respondents. Clause 2.7 is specifying the time for performance by the Applicants of the obligation to pay the Settlement Sum. The obligation to pay does not arise unless and until the Remaining Assets have been transferred. It is not a remedial provision. Delivery before the 7 days brings forward the time for payment of the Settlement Sum. It is cl 2.4 that is concerned with what is to occur if there is a failure to deliver the Remaining Assets within time. Clause 2.4 is not expressed in terms that apply only if there is termination. It applies if there is default by the Respondents in performing the obligation to transfer the Remaining Assets within 7 days of the date of the Deed.

28    As to these matters, it is also of some significance that cl 2.10 provides for a period of time in which default in payment of the Settlement Sum may be remedied. In effect, the Respondents contend for a similar position in relation to the obligation to transfer the Remaining Assets. If that had been intended then, having regard to the formality with which the Deed was expressed and the proximity of the provisions, it would be expected that language of the kind deployed in cl 2.10 would be used in cl 2.4. The fact that such language is not to be found in cl 2.4 is further basis to reject the submissions for the Respondents as to the time for performance of the obligation to transfer the Remaining Assets.

29    For those reasons, there is no room within the language to accommodate the construction for which the Respondents contend. Therefore, there is no choice to be made between constructions on the basis of alleged commercial absurdity. In any event, I do not accept that it is commercially absurd for the Deed to be construed as providing for the Settlement Sum to be forfeited if the Remaining Assets were not transferred on time. The Deed was entered into by the parties in order to resolve a dispute as to the transfer of the Remaining Assets (and other matters) that had been ongoing for a considerable time. There is no commercial absurdity in linking the payment of the Settlement Sum to prompt transfer of the Remaining Assets.

Second Claim, the promise to transfer was not a promise to physically deliver, it was a promise to make the Applicants the owners

30    The Respondents submitted that the promise to 'transfer' the Remaining Assets by no later than 7 days after the date of the Deed was 'not necessarily a promise to physically deliver'. They maintained that the term was concerned with the transfer of ownership and that by 1 April 2025 it was apparent from the dealings between the parties that the Respondents were treating the Applicants as the owners of the Remaining Assets.

31    The ordinary meaning of transfer when applied to an object is to move from one place to another. If used in that sense in the Deed, the term must mean physically deliver from the Respondents to the Applicants. However, as has been explained, in the Deed the term transfer is used in respect of the Remaining Assets (as defined). The definition of that term includes the tangible SIM Cards and intangible choses in action. The intangible choses are not capable of physical delivery. Accordingly, when the language of the definition is applied to the operative provisions, the agreement to transfer the Remaining Assets cannot simply mean physical delivery.

32    As a matter of law, the transfer of ownership of the Remaining Assets could have been effected by a provision of the Deed recording agreement that transfer of property will occur on a particular date or upon the occurrence of a particular event (such as payment of the $80,000). Property that is not real property can be transferred by deed, by agreement or by gift. Only in the latter case is delivery required (together with intention to make a gift). An equitable assignment without consideration is effected once the assignor has done all that the assignor is able to do. However, a transfer of ownership recorded in a deed or effected by way of agreement for valuable consideration can be provided for by the terms of the instrument. Property will pass at the time and in the manner therein specified. The Deed made no such express provision. It simply provided that the Respondents would 'transfer' the Remaining Assets to the Applicants at a future time. Therefore, the Deed contemplated that there would be some future unspecified step or steps to be undertaken by the Respondents that could be taken within 7 days of entry into the Deed and it was the taking of that step or steps by the Respondents that was required.

33    For those reasons, in my view, transfer was not used to mean the transfer of ownership. Rather, it was concerned with a much more practical matter, namely ensuring that it was the Applicants and not the Respondents who could use and enjoy the Remaining Assets to the exclusion of the Respondents. It was concerned with bringing to an end any possession or use of the Remaining Assets by the Respondents and passing all control to the Applicants. It required more than ownership to pass. It required the Respondents to deliver full control over the possession and use of the Remaining Assets so that the Remaining Assets could be used by the Applicants in the conduct of the business they had purchased and could do so to the exclusion of anyone else.

34    In the case of the SIM cards, to an ordinary businessperson that required physical delivery (thereby enabling the right of ownership to be exercised). In the case of those Remaining Assets which are choses in action in the form of rights that can be exercised as against a third party, to an ordinary businessperson that required the completion of such steps as could be taken by the Respondents to enable the Applicants to be able to assert against that third party the entitlement to those rights (and thereby possess and use the choses in action to the exclusion of others).

35    Therefore, in my view, on the proper construction of the Deed, 'transfer' required the Respondents to take those steps they could take which, when taken, would enable the Applicants to be able to both assert and enjoy in a practical way the benefits of ownership of the Remaining Assets after 7 days. It may be that there were steps that required the cooperation of the Applicants. This is supported by the language of cl 2.3 of the Deed which expressly provided:

The Applicants acknowledge and agree that they must complete and execute all documents or actions required to give effect to the transfer of the Remaining Assets in accordance with clause 2.1.

Significantly, the terms of cl 2.3 indicate that the concept of 'transfer' encompassed the completion and execution of documents or actions by the Applicants. It was not enough that the Applicants might be able to assert that they were the owners. This language further supports the conclusion that transfer meant the completion of everything that needed to be done by the Respondents to enable the Applicants (without any further action by the Applicants) to be able to both assert and enjoy in a practical way the benefits of ownership of the Remaining Assets.

36    Further, it was for the Respondents to do that which was necessary to effect the transfer. It was not for the Applicants to call for performance or to make any request of the Respondents. The Respondents were the ones who had the obligation to transfer and it was up to them to make the arrangements. On the facts, they took no steps to do so until the last day for performance of that obligation and they sought to perform by first delivering the SIM cards and then subsequently providing information as to how to use those cards to port control over the phone numbers and effect a change in the registration of the domain.

37    The suggestion by the Respondents that transfer might be effected by taking steps to acknowledge the Applicants as the owner of the Remaining Assets must be rejected.

Third Claim, the Respondents did everything that could be done by them

38    The Respondents made further submissions to the effect that everything that could be done by the Respondents to transfer the Remaining Assets had been done and all other steps required something to be done by the Applicants. It was suggested that it was up to the Applicants to 'reach out' and seek the further information and details that were needed to transfer the Remaining Assets other than the SIM cards. I do not accept that submission for reasons that have already been given. It was up to the Respondents to provide the information and details to enable the Applicants to arrange what needed to be done for the Applicants to possess the property. As has been explained, that required the Respondents to provide details that enabled the Applicants to effect the assignment of the choses in action and exercise rights against the third parties who conferred the rights to the domain and the phone numbers. This they did not do.

39    As to the SIM cards, the Respondents contended that there was an attempt to effect physical delivery on 1 April 2025. However, for reasons that have been given, they did not deliver the SIM cards. It cannot be said that performance was prevented by the conduct of the Applicants.

40    There were submissions to the effect that the Respondents were ready, willing and able to perform on 1 April 2025. However, that is a concept that was not relevant to the making of a determination as to whether the Respondents were in breach of the obligation to 'transfer'. It was only of possible relevance to the Respondents' own claim on the basis of a view that they were entitled to relief by way of specific performance requiring the Applicants to pay the amount of $80,000. The Respondents could not perform the obligation to transfer the Remaining Assets by 1 April 2025 by being ready, willing and able to transfer but not actually doing that which was required to effect the transfer.

41    There is one further point raised by the Applicants which, given the views I have reached, it is not necessary to decide, but I will deal with it briefly. Of the four SIM cards that the Respondents held on 1 April 2025, one was not the actual SIM card that had been held by the Respondents at the time of entry into the Deed. Rather, it was a new SIM card to which the relevant home number had been transferred. In my view, had the new SIM card been delivered on or before 1 April 2025 then that would have been effective to comply with that aspect of the transfer required by the Deed. To a reasonable businessperson, the terminology 'current' SIM card as used in the definition of the term Remaining Assets would mean the SIM card which at any point in time conferred the ability to use the relevant phone number.

Issue (3): Did the Respondents perform the obligation to transfer within time?

42    The terms of the Deed were abundantly clear that time was of the essence when it came to performance of the obligation to transfer the Remaining Assets. On the evidence, the Respondents made no contact with the Applicants in relation to the arrangements for the transfer until 1 April 2025. An attempt to deliver the SIM cards outside office hours was abandoned by the Respondents. Even if the SIM cards had been physically delivered at that time, then for reasons that have been given that would not have been sufficient to perform the obligation to transfer. The information to enable the Applicants to complete transfer of the intangible choses in action with third parties was not provided on 1 April 2025. As has been explained, it was also necessary to effect the porting of the phone numbers and the changes in the domain registration. Consequently, transfer could not be effected until the following day at the earliest. In the result, the SIM cards were delivered on 2 April 2025 and it was not until 4 April 2025 that further details and information necessary to effect the transfer were provided to the Applicants.

43    In those circumstances, I find that the Respondents breached the obligation to transfer the Remaining Assets by no later than 7 days after the date of the Deed.

Issue (4): If no to (3), are the Applicants estopped from denying that the Respondents performed the obligation to transfer within time?

44    The Respondents submitted that there had been a failure by the Applicants to inform the Respondents during their communications on 1 April 2025 that delivery of the SIM cards the following day would not be accepted as due performance of the delivery obligation. It was submitted that if it had been known that delivery the following day would not be accepted as due performance then steps could have been taken late on 1 April 2025 to deliver. It was said that because there was silence by the Applicants on that point that there was a representation that enforcements of the forfeiture under cl 2.4(a) would not occur if there was delivery the following day as had been indicated in the email communications between them after office hours in Sydney on 1 April 2025.

45    As has been mentioned, the email from the Respondents to the Applicants said:

Further to the below [being the email sent at approximately 5.50pm] and my further conversation with [the Applicants' solicitor]. Our courier will re-attempt delivery tomorrow morning.

46    It was agreed between the parties that nothing that was said in the conversation referred to in the email 'is contended by any party to be of any binding or contractual effect'. On that basis, the parties did not cross-examine the deponents to the affidavits relied upon (which were provided by the two parties to that conversation). Rather, the submission was put on the basis that there was a representation that arose from the failure on the part of the Applicants to say, in effect, that delivery the following day would be in breach. In particular, it was submitted for the Respondents that there was significance in the fact that the Applicants did not respond to the email stating words to the effect that delivery the following day would be accepted subject to the Applicants' strict legal rights. Further, it was said to be significant that the Applicants stayed silent when they received the SIM cards.

47    It can be seen that the terms of the emails that were exchanged simply reflect what the Respondents had indicated to the Applicants they intended to do in circumstances that had arisen from their own actions in leaving matters to the last minute. Further, the email related only to the delivery of the SIM cards, not the provision of the other information that was needed for the Applicants to effect the transfer.

48    I am not persuaded that any representation by conduct arose as to the course that the Applicants would take when it came to the terms of the Deed. The response given by the Applicants on 1 April 2025 simply referred to inability to receive delivery after hours and that 'the delivery will need to occur tomorrow'. There is also no evidence to the effect that there was reliance. Even on 2 April 2025 the required steps to effect transfer of the Remaining Assets were not taken by the Respondents.

49    For those reasons, the estoppel claim lacked any merit.

Issue (5): Subject to the answer to (6), if no to (3) and no to (4), what are the consequences, if any, of the failure to perform the obligation?

50    The Deed provided very clearly that any entitlement to the payment of the $80,000 was conditional upon timely performance of the obligation to transfer the Remaining Assets by no later than 7 days after the date of the Deed. Clause 2.4 specified a contractual remedy for default in that obligation. To the extent that they were required to do so, the Applicants gave notice on 3 April 2025 that they elected to rely upon the terms of cl 2.4. Save for the claim that cl 2.4 was a penalty, no submission was advanced to the contrary.

51    Therefore, subject to the answer to Issue (6), the Applicants are entitled to the relief provided for by cl 2.4.

Issue (6): Would the forfeiture of the Settlement Sum in accordance with the terms of the Deed be a penalty?

52    On the day of the hearing of the interlocutory applications, the Respondents raised for the first time a claim in the alternative that cl 2.4(a) was an unenforceable penalty. On the basis that the Applicants would have an opportunity to put on answering submissions and any affidavits, the Respondents were allowed to raise the point.

53    The submission advanced by the Respondents was to the effect that the forfeiture of payment of the Settlement Sum of $80,000.00 was an extravagant and unconscionable burden on the Respondents. The forfeiture of the entitlement to the Settlement Sum provided for by the Deed upon failure to comply with the obligation to transfer the Remaining Assets within 7 days of the date of the Deed was said to be imposed by a 'secondary stipulation' that operated as an 'additional detriment' that acted as security for the 'primary stipulation', namely the obligation to transfer. Reliance was placed upon Andrews v Australia and New Zealand Banking Group Limited [2012] HCA 30; (2012) 247 CLR 205 and the reasoning of Brereton JA in Kay v Playup Australia Pty Ltd [2020] NSWCA 33.

Relevant legal principles as to the law of penalties

54    In Ringrow Pty Ltd v BP Australia Pty Ltd [2005] HCA 71; (2005) 224 CLR 656, the High Court (at [11]-[12]) endorsed the application of the indicia outlined by Lord Dunedin in Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79 at 86-87. Those indicia are as follows:

2.    The essence of a penalty is a payment of money stipulated as in terrorem of the offending party; the essence of liquidated damages is a genuine covenanted pre-estimate of damage …

3.    The question whether a sum stipulated is penalty or liquidated damages is a question of construction to be decided upon the terms and inherent circumstances of each particular contract, judged of as at the time of the making of the contract, not as at the time of the breach …

4.    To assist this task of construction various tests have been suggested, which if applicable to the case under consideration may prove helpful, or even conclusive. Such are:

(a)    It will be held to be penalty if the sum stipulated for is extravagant and unconscionable in amount in comparison with the greatest loss that could conceivably be proved to have followed from the breach …

(b)    It will be held to be a penalty if the breach consists only in not paying a sum of money, and the sum stipulated is a sum greater than the sum which ought to have been paid …

(c)    There is a presumption (but no more) that it is penalty when 'a single lump sum is made payable by way of compensation, on the occurrence of one or more or all of several events, some of which may occasion serious and others but trifling damage'.

(footnotes omitted)

55    In Andrews, The High Court (French CJ, Gummow, Crennan, Kiefel and Bell JJ) described the general nature of a penalty clause as follows (at [10]):

In general terms, a stipulation prima facie imposes a penalty on a party (the first party) if, as a matter of substance, it is collateral (or accessory) to a primary stipulation in favour of a second party and this collateral stipulation, upon the failure of the primary stipulation, imposes upon the first party an additional detriment, the penalty, to the benefit of the second party. In that sense, the collateral or accessory stipulation is described as being in the nature of a security for and in terrorem of the satisfaction of the primary stipulation. If compensation can be made to the second party for the prejudice suffered by failure of the primary stipulation, the collateral stipulation and the penalty are enforced only to the extent of that compensation. The first party is relieved to that degree from liability to satisfy the collateral stipulation.

(footnotes omitted)

56    The court in Andrews also considered Dunlop at [69]-[77]. Their Honours made particular reference to Lord Atkinson's speech and concluded that 'the critical issue [in that case] was whether the sum agreed was commensurate with the interest protected by the bargain': at [75] citing Dunlop at 91-93.

57    Aspects of Dunlop were further examined by the High Court in Paciocco v Australia and New Zealand Banking Group Limited [2016] HCA 28; (2016) 258 CLR 525. The reasoning of the majority in that case placed emphasis on the purpose of the impugned clause in determining whether it was a penalty, with the predominant or only purpose of punishment for breach said to be the essence of a penalty: at [32] (Kiefel J, French CJ agreeing), [127], [158]-[159], [166] (Gageler J), [254], [259], [273] (Keane J).

58    It appears that aspects of the reasoning in Andrews and Paciocco qualify the statement of principles in Dunlop. The doctrine is not confined to instances where the penalty is said to be a consequence of breach. Instead, the focus is upon the interest that is being protected by the clause and whether the consequence is disproportionate to the purpose of protecting that interest.

59    Significantly, the interests that may be protected by a clause are not limited to affording a mechanism for compensation for the consequences of breach. In evaluating whether a clause is a penalty, it may be supported by some other interest or purpose than operating as a pre-estimate mechanism for loss consequent upon breach of an obligation to be performed: see, for example, the reasoning of Gageler J in Paciocco at [145], [160]-[162].

60    This aspect is significant in the present case because the Applicants do not seek to support the clause on the basis that it affords compensation for breach of the timely obligation to perform the transfer of the Remaining Assets. Rather, the Applicants point to the significance of those assets for maintaining connection with the customers of a business which was being purchased (the settlement deed operating in that context as a compromise of claims in respect of the purchase agreement that included an alleged failure to transfer the Remaining Assets): see below.

61    It is the identification of disproportion between the financial extent of the allegedly penal consequence of the impugned contractual stipulation (on the one hand) and the possible damage to the interest being protected by contractual stipulation (on the other hand) that is essential. The disproportion must be such as to make it unconscionable to rely upon the stipulation: Paciocco at [54] (Kiefel J, French CJ agreeing), [164] (Gageler J), [221], [240], [279] (Keane J). The consequence must be 'out of all proportion': Ringrow at [32]; and Paciocco at [54], [57] (Kiefel J, French CJ agreeing), [154], [164] (Gageler J), [256] (Keane J), [318]-[320] (Nettle J) or 'so far out of proportion with the positive interest in performance' as to amount to 'deterrence by threat of punishment' [164] (Gageler J).

62    The question whether a stipulation operates as a penalty is to be adjudged at the time that the obligation was assumed not at the later time when reliance is placed upon the stipulation. It is to be adjudged by reference to the nature of the interest that it is the purpose of the clause to protect. Therefore, the determination as to whether a covenant in a deed operates as a penalty must be assessed at the time of entry into the deed.

63    The 'evidentiary and persuasive onus throughout [the] inquiry' is on the party alleging the penalty: Paciocco at [167] (Gageler J).

64    Authorities concerning the application of the law on penalties to deeds of settlement tend to distinguish 'a forbearance in relation to an existing debt' from 'promises whose effect is to compel performance' of a new obligation: Auzcare Pty Ltd v Idameneo (No 123) Pty Ltd [2015] NSWCA 412; (2015) 91 NSWLR 581 at [21], [24] (Ward and Leeming JJA, Emmett AJA). For example, a clause requiring the payment of a sum of money to one party has been found not to be a penalty in circumstances where the terms of settlement contained an express or implied acknowledgement of liability for that amount on the part of the other party at the time the settlement agreement was executed: Lachlan v HP Mercantile Pty Ltd [2015] NSWCA 130; (2015) 89 NSWLR 198 at [43] (Bathurst CJ, Beazley P and McColl JA); and Calcorp (Australia) Pty Ltd v 271 Collins Pty Ltd [2010] VSCA 259; (2010) 29 VR 462 at [15]-[16] (Nettle JA, Redlich and Harper JJA agreeing); see also Di Gregorio v Jersey Developments 27 Pty Ltd [2018] NSWSC 966. Where a settlement deed provides for payment of an additional amount on default then in deciding whether the additional amount is a penalty, the Court will evaluate whether the provision operates, in effect, as the withdrawal of the forbearance in respect of a liability to pay the additional amount or the reinstatement of a larger claim that was compromised by the deed.

65    More generally, the terms of the settlement deed are to be considered in context, that is, in light of the prior dealings between the parties and the dispute compromised: Cameron v UBS AG [2000] VSCA 222; (2000) 2 VR 108 at [28] (Buchanan JA), [20]-[22] (Phillips JA, Winneke P substantially agreeing); and see also Morgan Stanley Wealth Management Australia Pty Ltd v Detata (No 3) [2018] WASC 32 at [426] (Banks-Smith J).

66    While many of the cases concern the application of the law on penalties to an impugned clause requiring the transfer of a sum of money, it is well established that the doctrine has a wider application. For example, the law on penalties has been held to be applicable to non-monetary penalties such as the transfer of property: Ringrow at [21]; Jobson v Johnson [1989] 1 WLR 1026 at 1034-1036 (Dillon LJ) (re-transfer of shareholding on default); and Wollondilly Shire Council v Picton Power Lines Pty Ltd (1994) 33 NSWLR 551 at 555-557 (Handley JA, Clarke and Meagher JJ agreeing) (though the obligation to re-sell land was ultimately found to be valid). There is also commentary suggesting that the law on penalties applies to provisions requiring the forfeiture of paid instalments of the purchase price in a transaction: see Rossiter CJ, Penalties and Forfeiture: Judicial Review of Contractual Penalties and Relief Against Forfeiture of Proprietary Interests (The Law Book Company Limited, 1992) 112-117.

67    In Kay v Playup Australia, Brereton JA (Macfarlan JA and Simpson AJA agreeing) was of the view that 'the deprivation of accrued contractual rights can amount to a penalty for the purpose of the doctrine of penalties' (at [93]) and that (at [91]):

The assumption that the doctrine may apply in respect of the deprivation of rights that have already accrued under the contract, such as provisions that have the effect of authorising retention or withholding payment of, or extinguishing a right to receive, remuneration already earned but unpaid, is supported by authority …

(footnotes omitted)

Authorities referred to in support of that proposition included Bysouth v Shire of Blackburn and Mitcham (No 2) [1928] VLR 562 (forfeiture of moneys already earned); Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689 (clause allowing the suspension or withholding of sums otherwise payable conceded as a penalty); Forestry Commission of New South Wales v Stefanetto (1976) 133 CLR 507 (contractual right to take possession of equipment); and Export Credits Guarantee Department v Universal Oil Products Co [1983] 2 All ER (though this case concerned a different issue, see Slade LJ's comments at 219-220 in the Court of Appeal).

68    The accrued contractual rights that were said to be forfeited by the purchaser in Kay v Playup Australia were the seller warranties and restraints. Brereton JA considered the purpose of the impugned clause as being to obtain 'payment of each instalment of the Deferred Payment as and when it fell due' and his Honour reasoned that (at [95]):

… In the context of a sale of a company carrying on a business, restraints are a fundamental aspect of protection of the goodwill of the subject business, so as to ensure that the purchaser actually gains the benefit of the business. Avoidance ab initio of the Restraints and the Seller Warranties is, as [the primary judge found], a severe consequence; it represents a significant undercutting of the subject matter of the sale. Those consequences were out of all proportion to [the seller's] legitimate interest in securing payment of each instalment as and when it fell due. In my judgment, if the purpose of cl 4.3(b) was to focus the mind of [the purchaser] on ensuring that the instalments were paid punctually, it sought to achieve that purpose by imposing such consequences that its operation was plainly in terrorem.

69    I accept that a clause which operates to deprive a party of accrued rights under a commercial instrument in circumstances where that deprivation operates upon default in timely performance may be a penalty.

The Applicants' submissions

70    The Applicants' characterised the purpose of cl 2.4(a) as seeking to protect their interest in having the expedient transfer of the property 'to protect … customer connection'. It was an interest that was said to be, by its very nature, 'intangible and unquantifiable'. The Applicants did not seek to rely upon any evidence beyond that which was evident from the terms of the Deed and the nature of the claims that the Deed compromised.

71    The Applicants submitted that it was relevant that the obligation to transfer the Remaining Assets as agreed in the Deed, formed part of the terms of settlement of an agreement to purchase a business that was said to require the transfer of the Remaining Assets to the Applicants. For reasons that have been given, I accept that submission. However, it is a submission that must be placed in proper context. In that regard, recitals A, B and C to the Deed state:

On or about 15 September 2023, the Applicants and the Respondents entered into a contract for the sale of J & P's insurance broking business which included, amongst other things, that the Respondents transfer certain assets owned by J & P to the Applicants and the Applicants were to pay the Respondents a maximum of $350,000 for the Respondents' insurance broking business (BSP Agreement).

The Applicants claim that:

a.    the Respondents did not transfer the Remaining Assets to the Applicants in accordance with the terms of the BSP Agreement;

b.    J & P and Prasad:

i.    breached the Restraint of Trade by continuing to contact clients of the business the subject of the BSP Agreement;

ii.    engaged in misleading or deceptive conduct in relation to the Remaining Assets by continuing to hold themselves out as authorised representatives of PSC Connect after their authorisation ceased; and

iii.    J & P breached the BSP Agreement by failing to transfer the Remaining Assets to PSC AMGI;

c.    Prasad and Khan (as Guarantors under the BSP Agreement) are liable to PSC AMGI for J & P's alleged breaches of the BSP Agreement; and

d.    they have suffered loss and damage as a result of these actions (the Claims).

The Respondents deny:

a.    the Applicants' Claims;

b.    that they were required to transfer the phone number [redacted]; and

c.    that they breached the Restraint of Trade in any way (the Dispute).

72    The Applicants also emphasised that the onus of proof was on the Respondents as those alleging penalty.

73    The amount of $80,000 represents an amount agreed as part of the resolution of competing claims concerning the performance of the agreement to purchase the business. According to the recitals it is a much lesser sum than that which had been agreed. The Deed may be approached on the basis that it effected a compromise of all past claims including the breaches of the 'BSP Agreement' as referred to in the recitals and the consequences of those matters for the sum to be paid to the Respondents.

74    In the ordinary course, the phone numbers, email address and website domain for a business would be significant assets for the goodwill of the business in the form of what the Applicants described as 'customer connection'. They were likely to be the means by which business inquiries would be received from customers. They were also assets that could be used to contact existing clients of the business to maintain their connection to the business and hence their ongoing custom.

75    I accept that at the time of entry into the Deed there was a real possibility of loss of customer connection if there was delay in transferring the Remaining Assets. Further, the Applicants had an interest in the expeditious completion of the transfer in order to maintain that connection to the extent that it remained.

76    Clause 2.6 of the Deed recorded agreement by the Applicants to pay the Respondents the sum of $80,000 by way of settlement. The benefit of the covenant provides for payment on the terms of the Deed accrued at the time of entry into the Deed. However, as has been explained, the time for performance of the obligation on the part of the Applicants to pay the Settlement Sum was conditioned upon performance by the Respondents of their own obligation under the Deed to transfer the Remaining Assets within 7 days of the date of the Deed. Therefore, on the terms of the Deed, there was no right to payment of the $80,000 unless that obligation was duly performed.

77    Clause 2.4 was expressed as taking effect upon default by the Respondents in performing the provisions that required the Respondents to transfer the Remaining Assets within 7 days of the date of the Deed. It provided in cl 2.4(a) that: 'the Respondents forfeit their entitlement to be paid the Settlement Sum in accordance with clause 2.6' upon any such default. So, not only was the entitlement to the payment of the $80,000 conditional on performance of the obligation to transfer the Remaining Assets, the entitlement to that payment was to be forfeited if that obligation was not duly performed within 7 days of the date of the Deed.

78    In all the circumstances, I conclude that the purpose of the terms of cl 2.4 was to protect the interest of the Applicants in securing the prompt transfer of the Remaining Assets because of their significance for maintaining customer connection. There is a sufficient basis to uphold the contention for the Applicants to the effect that the Remaining Assets were significant assets when it came to the operation and benefit of the business that was being acquired pursuant to the underlying agreement that had given rise to the dispute that was compromised by the Deed.

79    The question is whether measured against the purpose of protecting that interest, the forfeiture of the whole amount payable to the Respondents under the Deed was out of all proportion to the interest being protected. At the time of entry into the Deed it would have been evident that delay in performance of the promise to transfer the Remaining Assets could diminish the value of the performance of the promise to an extent that would have been difficult to quantify. It was conceivable that the value of the business might have been greatly diminished. There is some indication of that potential in the differential between the purchase price that had been agreed and the amount of the Settlement Sum.

80    The Respondents do not discharge their burden by pointing to a differential between the loss actually suffered by reason of the nature of the default in performance of the obligation to transfer. Rather, they must be able to demonstrate that at the time the parties entered into the Deed, having regard to the nature of the interest that the provision was protecting, the consequence of forfeiture was out of all proportion to the protection of that interest. As I have explained, I accept that the purpose of the clause was to protect the connection with the customers of the business and hence the diminished value that was agreed to be paid. There is no evidence from which it might be concluded that the Respondents discharged that burden.

81    In all those circumstances, I conclude that the Respondents have failed to demonstrate that cl 2.4(a) operated by way of penalty.

Issue (7): Taking account of the answers to (1) to (6), what is the appropriate relief?

82    It is common ground that four SIM Cards have been delivered. For reasons I have given, the cards that were delivered met the obligation to provide the 'current' SIM Cards.

83    Otherwise, I am satisfied that there are steps that require the cooperation of the Respondents that remain to be undertaken in order to effect the transfer of the Remaining Assets. There should be orders requiring those steps to be taken.

Orders

84    The Applicants have been successful on their interlocutory application. Consequently, they have demonstrated an entitlement to judgment in the terms provided for in the Deed. There should be orders accordingly. There should also be a declaratory order to the effect that the Settlement Sum is not payable under the Deed.

85    Somewhat strangely, in addition to seeking judgment in the proceedings, the Applicants also sought orders to effect the discontinuance of the whole of the proceedings. In my view, the provision for discontinuance was intended to operate if there had been due performance by the Respondents of the obligation to transfer the Remaining Assets. As there has not been, an order that would provide for discontinuance is not appropriate.

86    The interlocutory application brought by the Respondents must be dismissed.

87    The Applicants are entitled to their costs on the interlocutory applications. They should be taxed as one set of costs. Otherwise, the Applicants seek no order as to the costs of the proceedings. That approach reflects the terms of the Deed. There should be an order accordingly.

Associate:

Dated:    3 September 2025