Stepping Stones Child Care Centre (ACT) Pty Ltd Acn 120 005 503 v Early Learning Services Ltd ACN 123 828 553

• Jurisdiction: Australian Capital Territory
• Judge: Refshauge J
• Judgment Date: 09 September 2013
• Court: Supreme Court of ACT
• Docket Number: No. SC 400 of 2008
• Date: 09 September 2013

[2013] ACTSC 173

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Judge:

Refshauge J

No. SC 400 of 2008

Between:

Stepping Stones Child Care Centre (ACT) Pty Limited Acn 120 005 503

Plaintiff

and

Early Learning Services Limited ACN 123 828 553

Defendant

Counsel for the Plaintiff: Mr M J Slattery QC, Mr M J Walsh

Counsel for the Respondent: Mr B O'Donnell QC, Mr S B Hooper

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Corporations Act 2001 (Cth)

Court Procedures Rules 2006 (ACT), r 50(2)

Elizabeth Peden, Good Faith in the Performance of Contracts (LexisNexis Butterworths, 2003)

A F Mason, ‘Contract, Good Faith and Equitable Standards in Fair Dealing’ (2000) 116 Law Quarterly Review 66

CONTRACTS — General contractual principles — construction and interpretation of contracts — “best endeavours” vs “reasonable endeavours” — whether best endeavours were used — whether termination was effective — turns on its own facts

CONTRACTS — Remedies — specific performance — meaning of ready, willing and able

CORPORATIONS — knowledge of — means of imputing knowledge

ORDER

THE COURT ORDERS THAT:

• 1. There be judgment for the defendant.

• 2. The parties be heard as to costs.

1 In Australia historically, the day care for children in the years before school had two European roots: the idea of the cr?che from France and the kindergarten movement in Germany.

2 While there had long been ‘for profit’ child care in Australia, subsidies were made available to the private sector and companies were established to enter the market. Funding changes in 1996 provided the opportunity for larger companies to invest in the sector. One way in which this was done was by purchasing child care centres from other operators.

3 Companies of which Ms Fiona O'Donnell was sole director, Stepping Stones Child Care Centre (ACT) Pty Ltd ( Stepping Stones), the plaintiff, and Conder Child Care Services Pty Ltd, conducted four child care centres in the ACT, three of them being conducted by Stepping Stones at Symonston, Bonython and Gungahlin. The other, conducted at Conder by Conder Child Care Services Pty Ltd, was called Lavender Lane Child Care Services.

4 On 6 December 2007, the defendant, Early Learning Services Limited ( ELS), entered into contracts with Stepping Stones and Conder Child Care Services Pty Ltd to purchase the four child care centres. Incorporated in February 2007, ELS was a public company listed on the Australian Stock Exchange and, by 30 December 2007, owning twenty-nine child care centres and purchasing another forty-four.

5 The sale of each of the four centres was the subject of a separate contract, though most of the terms of each contract were identical.

6 The sales of the Gungahlin centre and of the Lavender Lane centre were duly completed in accordance with the relevant contracts. On 29 February 2008, however, ELS purported to terminate the contracts for the purchase of the Symonston and Bonython centres. Stepping Stones did not accept the purported termination, and continued to prepare for completion of these two contracts.

7 By 4 April 2008, described in the contracts as the ‘Sunset Date’, Stepping Stones purported to be in a position to complete the contracts, but ELS did not complete the contracts.

8 On 19 May 2008, Stepping Stones commenced these proceedings seeking a declaration that both the contract for sale of the Symonston centre and the contract for sale of the Bonython centre were valid and enforceable, and for orders that the contracts be specifically performed.

THE PLEADINGS

9 The proceedings were commenced by Originating Claim filed on 19 May 2008, to which was attached a Statement of Claim (r 50(2) of the Court Procedures Rules 2006 (ACT)).

10 ELS filed a defence on 23 June 2008. It was, however, amended a number of times and the final defence, a further amended defence, was filed by leave on 20 April 2009.

11 A reply was filed by Stepping Stones on 26 September 2008, and, by leave on 22 April 2009, an amended reply was filed to the further amended defence.

12 The pleadings showed the following. Both Stepping Stones and ELS were corporations registered under the Corporations Act 2001 (Cth) and ELS was listed as a public company on the Australian Stock Exchange.

The Symonston Contract

13 On 6 December 2007, Stepping Stones and ELS entered into an agreement in writing ( the Symonston Contract) for the sale of the child care business conducted by Stepping Stones at Symonston in the...