Ashmore Developments Pty Ltd v Eaton

Ashmore Developments Pty Ltd sought special leave to appeal to the High Court of Australia from a majority decision of the Full Court of Queensland. The dispute concerned the effect of clause 14A of the standard REIQ contract (now clause 16(a)) on outstanding rents at the date of completion of a property sale. The applicant vendor had recovered a judgment for rent owed by a tenant as at the completion date, but the Full Court majority held that the contractual clause effectively assigned these outstanding rents back to the vendor, despite section 117 of the Property Law Act 1974 (Qld) having already assigned them to the purchaser.

The central legal issue before the High Court was whether clause 14A of the REIQ contract operated to effect a legal assignment back of outstanding rents from the purchaser to the vendor, thereby impacting the rights of the tenant (the debtor) to know to whom rent payments were owed. The applicant argued that the clause was a renunciation of a right conferred solely for the benefit of the purchaser, while the Court questioned whether such a renunciation could be effective given the three-party nature of the transaction involving the vendor, purchaser, and tenant.

The Court considered whether the clause, by itself, affected a legal assignment and the implications for the debtor. The applicant contended that the dissenting judgment of Byrne J provided the correct interpretation, viewing the clause as a renunciation of the assignee's statutory entitlement for the purchaser's benefit. However, Brennan J raised concerns about the debtor's position, questioning whether they could be in doubt as to whom to pay and whether payment to one party would discharge their obligation to the other, potentially leading to further disputes between vendor and purchaser.