Commercial & General Corporation Pty Ltd v Manassen Holdings Pty Ltd

The appeal before the Full Court of the Supreme Court of South Australia concerned an Underwriting Agreement between Commercial & General Corporation Pty Ltd (the plaintiffs) and Manassen Holdings Pty Ltd (the defendant). The dispute arose from the plaintiffs' claim for a daily fee under the agreement, which the defendant resisted. The plaintiffs had agreed to subscribe for units in a unit trust managed by the defendant, to assist the defendant in settling a significant land sale. The agreement was subject to certain conditions precedent and included provisions for termination and the payment of a daily fee if the settlement date, the "Relevant Date," was extended.

The central legal issues before the court were the proper construction of the Underwriting Agreement, specifically the meaning of "Relevant Date" and the conditions under which the plaintiffs became entitled to the daily fee. The court was also required to determine whether the plaintiffs had accrued termination rights after the initial settlement date passed without closing, and if so, whether their subsequent election to proceed constituted a waiver of those rights. Furthermore, the court considered whether the plaintiffs' claim for the daily fee was sustainable on the grounds of promissory estoppel, and if so, whether such an estoppel could operate to create positive legal rights.

The majority of the court, comprising Livesey and Stanley JJ, held that the plaintiffs were only entitled to the daily fee if the "Relevant Date" was extended to 30 November 2016 due to a failure to obtain Foreign Investment Board Approval. They reasoned that the purpose of the daily fee was to compensate the plaintiffs for keeping the Maximum Underwritten Amount available. Once the original Relevant Date of 31 October 2016 passed without Closing, the plaintiffs were no longer bound to subscribe and had accrued termination rights. If they subsequently chose to waive these rights and proceed, this was a matter of their own choice and did not mean they were "required to subscribe" in a manner that would trigger the daily fee. The court also found that it was unlikely commercial parties would intend for a daily fee to be payable when one party retained the sole discretion to proceed and also the right to terminate. Regarding promissory estoppel, the court held that the mere non-receipt of a promised benefit is not sufficient detriment; rather, it is the reliance and consequential detriment that forms the basis of such a claim, and that promissory estoppel can, in appropriate circumstances, create positive legal rights. Nicholson J dissented in part.

The Full Court allowed the appeal, setting aside the orders made at trial, and dismissed the cross-appeal and the defendant's notice of contention. The parties were to be heard on the terms of the final orders and the question of costs.