Auburn Shopping Village Pty Ltd v Nelmeer Hoteliers Pty Ltd

Auburn Shopping Village Pty Ltd (the vendor) appealed to the Court of Appeal of New South Wales against a decision of the primary judge concerning the termination of an agreement for the sale of poker machine permits. The dispute arose from the vendor's termination of the agreement, which had been entered into pursuant to an option for the sale of these permits, and the purchaser, Nelmeer Hoteliers Pty Ltd, sought relief against forfeiture.

The Court of Appeal was required to determine whether the purchaser possessed a subsisting equitable interest in the poker machine permits that arose independently of the sale agreement. Furthermore, the court had to consider whether it would be unconscientious for the vendor to terminate the agreement on the grounds of surprise or mistake, thereby engaging the equitable jurisdiction to grant relief against forfeiture.

The Court of Appeal affirmed the primary judge's finding that the purchaser had acquired a proprietary interest in the permits upon the exercise of the option, which was not extinguished by the subsequent sale agreement. The court applied the equitable principle that relief against forfeiture may be granted where a party has a subsisting equitable interest and the forfeiture would be unconscientious. It was held that the vendor's termination, based on a misunderstanding or surprise regarding the purchaser's actions in relation to the permits, constituted unconscionable conduct, justifying the grant of relief.

The appeal was dismissed, and the vendor was ordered to pay the costs of the appeal.