Centuria Property Funds Ltd v Thorn Australia Pty Ltd

Centuria Property Funds Ltd and others (the appellants) appealed to the Court of Appeal of New South Wales against a decision of the primary judge who had found that no binding lease or agreement for lease had come into existence between the parties. The dispute arose from a proposed lease transaction where the respondent, Thorn Australia Pty Ltd, withdrew from the proposed lease before the formal lease documents were executed by both parties.

The central legal issue before the Court of Appeal was whether the primary judge had erred in concluding that the parties had not entered into a binding lease or agreement for lease. This required the court to determine whether the heads of agreement, which expressly reserved the parties' right to withdraw from negotiations at any time prior to the execution of the lease documents by both parties, had been superseded by conduct that created a binding agreement, despite the lack of formal execution.

The Court of Appeal affirmed the primary judge's reasoning, holding that the express terms of the heads of agreement were determinative. The reservation of the right to withdraw until formal execution meant that no binding agreement could arise unless and until both parties executed the lease documents. The respondent's actions, such as providing executed lease documents to the appellants' solicitors and obtaining early access to the premises for limited purposes, did not, in the circumstances, constitute an intention to be bound by a lease or agreement for lease in the absence of the appellants' execution of the formal documents. The court applied the principle that clear contractual terms, particularly those relating to the formation of a binding agreement, will be upheld.

The appeal was dismissed with costs.