Gilligan's Backpackers Hotel & Resort Pty Ltd & Anor v Mad Dogs Pty Ltd

[2016] QCA 304

Queensland Court of Appeal

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Interrogate

Catchwords

1. Contract
2. › Discharge, breach and defences to action for breach
3. › Repudiation and non-performance
4. › Anticipatory repudiation
5. › Acceptance of repudiation
6. › Readiness and willingness to perform
7. › Whether party terminating for repudiation must show readiness and willingness to perform
8. › Whether insolvency precluded readiness and willingness
1. Corporations
2. › Insolvency
3. › Solvency and insolvency
4. › Commercial insolvency test
5. › Ability to pay debts as and when they become due and payable
6. › Assessment of solvency at a particular date
7. › Relevance of realisable assets and future debts
8. › Corporations Act 2001 (Cth), s 95A
1. Contract
2. › General contractual principles
3. › Damages
4. › Loss of bargain damages
5. › Whether insolvent party entitled to damages for loss of bargain upon termination for other party's repudiation

Quick Take

A company that is insolvent at the time it terminates a contract for the other party's anticipatory repudiation is not ready, willing and able to perform the agreement and cannot recover damages for loss of the bargain. Insolvency precludes readiness and willingness because the company's director is bound by s 588G of the Corporations Act to prevent the company from incurring debts, and performance of a trading contract necessarily involves incurring debts. The willingness and capacity of shareholders or directors to provide financial support is assessed by reference to what they actually did, not what they claim they would have done.