$2.7M pharmacy sale goes bust

selling pharmacy sale business money legal

The purchaser attempted to rescind his contract by claiming he hadn’t been able to receive PBS approval in time… but the Supreme Court saw the story differently

The $2,730,000 sale of a pharmacy in regional New South Wales has gone awry after the purchaser attempted to rescind the sale contract.

This sale was heralded for completion on 6 March 2017, heard the Supreme Court of NSW.

However under a special condition of the contract, the purchaser was provided the ability to rescind the contract if he had failed to obtain PBS approval by “the day prior to the date of completion”.

In February 2017, the purchaser completed an application form for a new approval number to supply pharmaceutical benefits at the premises.

However when submitting his form to the Department of Human Services, he requested approval with effect from 7 March 2017 – one day after the signalled completion date.

When the completion date of Monday 6 March finally came, the purchaser issued a letter to the vendor rescinding the contract.

The vendor alleged that the purchaser had “repudiated the sale contract by wrongfully attempting to terminate it by the rescission notice, failing to attend settlement on 6 March 2017 and failing to use its best endeavours to obtain approval as required by special condition … of the sale contract.”

Following this, the vendor re-sold the business on 5 June 2017 for $350,000 less than the price in the original sale contract.

Hon Acting Justice Emmett​​ AO found he was “satisfied that the purchaser did not comply with its obligations.

“It was known to the purchaser from the time of receipt of the administration letter that, unless the Medicare delegate was asked to make a decision earlier, the condition in the sale contract would not be satisfied.

“There is no evidence to suggest that any attempt was made … on behalf of the purchaser to request Medicare to consider making a decision prior to 7 March 2017.

“It was not entitled to rescind the sale contract on 6 March 2017,”  found the NSW Supreme Court.

“It had failed to discharge its obligation under [the special condition] to do all things and make all applications and returns as may be requisite or necessary on its part to obtain approval in respect of the application.”

Conversely, Justice Emmett dismissed a cross-claim that alleged the vendor had made “misleading and deceptive” representations about the business being a potential “greenfield” site.

The judge found the purchaser had repudiated the sale contract and that, as a consequence, the vendor had suffered loss and damage.

Justice Emmett ruled that the vendor was entitled to keep the purchaser’s deposit of $271,000, and was also entitled to damages resulting from $350,000 loss of sale, as well as $79,000 in stock-take costs, solicitor’s fees and broker’s commissions.

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