Carbone v Metricon Homes Pty Ltd

The appeal concerned a dispute between Carbone (the purchaser) and Metricon Homes Pty Ltd (the vendor) arising from deeds of put and call option for the sale of land. The purchaser paid a call option fee upon entering into the deed. A key term of the contract stipulated that if the vendor failed to register a plan of subdivision as required, the purchaser had the right to "rescind" the contract. The central issue was the interpretation of the word "rescind" in this context.

The court was required to determine whether the term "rescind" in the contract meant to treat the contract as void from its inception, thereby entitling the purchaser to a refund of the call option fee, or whether it meant to terminate only the executory obligations under the contract, leaving the call option fee forfeited.

The Court of Appeal, comprising Meagher, Payne and White JJA, dismissed the appeal. Their Honours reasoned that the ordinary meaning of "rescind" in a contractual context, particularly where a party has a right to terminate due to a breach, is to bring the contract to an end from that point forward, rather than to treat it as if it never existed. This interpretation meant that the executory obligations of the contract were terminated, but the executed parts, including the payment of the call option fee, remained.

The appeal was dismissed with costs.