Cao v ISPT Pty Ltd

Case [2024] NSWCA 188


Court of Appeal


Supreme Court


New South Wales

Medium Neutral Citation: Cao v ISPT Pty Ltd [2024] NSWCA 188
Hearing dates: 16 May 2024
Date of orders: 08 August 2024
Decision date: 08 August 2024
Before: Meagher JA at [1];
Kirk JA at [2];
Griffiths AJA at [73]
Decision:

1. Appeal dismissed.

2. Appellants to pay the respondents’ costs of the appeal.

Catchwords:

CONTRACTS – Construction of a commercial lease – Whether COVID public health restrictions prevented tenant from “opening” the premises for business – Paramount clause to be construed before paramountcy can take effect – Not construed to require illegal activity

CONTRACTS – Termination – Frustration – Impossibility of performance – Frustration does not apply as COVID public health orders as supervening event was risk for which tenant had assumed responsibility under the lease – Relevant orders did not require radical or fundamental change in what contracted for in any event

Legislation Cited:

Biosecurity Act 2015 (Cth), Ch 8 Pt 2

Fair Work Act 2009 (Cth), s 789GDA

Frustrated Contracts Act 1978 (NSW)

Public Health Act 2010 (NSW)

Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (Cth)

Public Health (COVID-19 Places of Social Gathering) Order 2020 (NSW)

Public Health (COVID-19 Restrictions on Gathering and Movement) Order (No 4) (2020) (NSW), cl 8A

Public Health Bill 2010

Retail and Other Commercial Lease (COVID-19) Regulation 2020 (NSW)

Retail and Other Commercial Leases (COVID-19) Regulation (No 2) 2020 (NSW)

Retail and Other Commercial Leases (COVID-19) Regulation (No 3) 2020 (NSW)

Cases Cited:

Bank Line Ltd v Arthur Capel & Co [1919] AC 435

Brisbane City Council v Group Projects Pty Ltd [1979] HCA 54; (1979) 145 CLR 143

Chinatex (Australia) Pty Limited v Bindaree Beef Pty Limited [2018] NSWCA 126

City of Subiaco v Heytesbury Properties Pty Ltd [2001] WASCA 140; (2001) 24 WAR 146

Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337

Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696

Edwinton Commercial Corporation & Anor v Tsavliris Russ (Worldwide Salvage & Towage) Ltd (The Sea Angel) [2007] EWCA Civ 547; [2007] 2 Lloyd’s Rep 517

Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640

HDI Global Specialty SE v Wonkana No 3 Pty Ltd [2020] NSWCA 296; (2020) 104 NSWLR 634

Housing Commission (NSW) v Falconer [1981] 1 NSWLR 547

J & P Marlow (No 2) Pty Ltd v Hayes & McCabe [2023] NSWCA 117; (2023) 112 NSWLR 29

Laundy Hotels (Quarry) Pty Ltd v Dyco Hotels Pty Ltd [2023] HCA 6; (2023) 276 CLR 500

LCA Marrickville Pty Ltd v Swiss International SE [2022] FCAFC 17; (2022) 290 FCR 435

Lee Chee Wei v Tan HorPeow Victor [2007] 3 SLR 537; [2007] SGCA 22

London & Northern Estates Co v Schlesinger [1916] 1 KB 20

National Carriers Ltd v Panalpina(Northern) Ltd [1981] AC 675

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Details
AGLC
Cao v ISPT Pty Ltd [2024] NSWCA 188
Case
[2024] NSWCA 188
Decision Date

CaseChat Overview and Summary

The appeal in *Cao v ISPT Pty Ltd* concerned the construction of a commercial lease and whether COVID-19 public health restrictions frustrated the lease agreement. The tenant, Cao, argued that the restrictions prevented the premises from being "opened" for business as required by the lease, and that the lease had been frustrated by these supervening events. ISPT Pty Ltd, the landlord, contended that the tenant remained obligated under the lease.

The primary legal issues before the Court of Appeal of New South Wales were whether the COVID-19 public health orders rendered performance of the lease impossible, thereby frustrating the contract, and how the "paramount clause" of the lease should be construed in light of these restrictions. Specifically, the court had to determine if the tenant was excused from its obligations due to the inability to operate the premises in the manner contemplated by the lease, and whether the tenant had assumed the risk of such restrictions under the terms of the lease.

The court reasoned that the paramount clause, which stipulated that the tenant must "open and use the Premises for the purpose of a [specified business] at all times during the Term," did not require illegal activity. Therefore, compliance with public health orders that prohibited opening for business did not constitute a breach of this clause. Furthermore, the court found that the doctrine of frustration did not apply because the COVID-19 public health orders were a risk for which the tenant had assumed responsibility under the lease. The court held that the orders did not necessitate a radical or fundamental change in what was contracted for, meaning the core obligations of the lease remained substantially the same, albeit with a temporary inability to trade.

Consequently, the appeal was dismissed, and the appellants were ordered to pay the respondents' costs of the appeal.

Orders

Orders of the court

1. Appeal dismissed.

2. Appellants to pay the respondents’ costs of the appeal.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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