Daher v Gembane Pty Ltd

Case [2012] SADC 68


DISTRICT COURT OF SOUTH AUSTRALIA

(Civil)

DAHER v GEMBANE PTY LTD & ANOR

[2012] SADC 68

Judgment of His Honour Judge Tilmouth

23 May 2012

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS

The parties executed an agreement to lease over a property intending to establish a cafe/restaurant business.  The agreement required the lessee to obtain the prior written approval of the lessor before making any alterations or modifications, to contribute $100,000 towards 'capital works' and that the lessor agree 'to sell the premises within the first two years to the lessee at an agreed 'market value'.

Held 1:  The requirement to contribute the $100,000 was understood by the parties as relating to the structure of the building and not to alterations for the purpose of converting the building into a cafe/restaurant.

Held 2.  The primary responsibility for the carriage and cost thereof falls on the lessee, who may then call upon the lessor to contribute up to $100,000 for 'capital works' of the structural kind.

Held 3.  The words of the special condition 'agrees to sell the premises' was understood by the parties to confer a right to purchase.  As so construed the obligation may be fulfilled by the defendants at any time within the two year period.

Retail and Commercial Leases Act 1995 (SA) ss 11 & 12; Landlord and Tenant Act 1936 (SA) s 10; Radford v De Frobervill [1977] 1 WLR 1262; Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500; Real Property Act 1886 (SA) s 191(ii); Zhu v Treasurer of the State of New South Wales (2004) 218 CLR 530; Watson v Phipps (1985) 63 ALR 321, referred to.
Western Export Services Inc and Ors v Jireh International Pty Ltd (2011) 287 ALR 604, [2011] HCA 45; Toll (FGCT Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; Codelfa Constructions Pty Ltd v State Railway Authority of New South Wales (1982) 149 CLR 337; Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272, applied.
Viscount Chelsea v Muscat [1990] 2 EGLR 48, distinguished.

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS - IMPLIED TERMS - TERMS ESSENTIAL TO ENABLE PERFORMANCE

Held 4:  It is appropriate to imply terms that the lessor could not decline to contribute towards capital works or decline to agree market value or refuse to provide written approval to alterations or modifications in bad faith, unreasonably or on extraneous grounds.

Held 5:  A breach of the terms of building approval imposed by the Council did not constitute a breach of the agreement to lease because the lease specifically provides 'this Agreement is not subject to such approvals'.

Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234; Hughes Aircraft Systems International v Air Services Australia (1997) 146 ALR 1 at 36-37; Aiton Australia Pty Ltd v Transfield Pty Ltd (1999) 153 FLR 236;

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AGLC
Daher v Gembane Pty Ltd [2012] SADC 68
Case
[2012] SADC 68
Decision Date

CaseChat Overview and Summary

The case of Daher v Gembane Pty Ltd before the Supreme Court of New South Wales involved a dispute between the plaintiff, Daher, and the defendant, Gembane Pty Ltd, regarding the interpretation and enforcement of a contract. The plaintiff, Daher, alleged that the defendant, Gembane Pty Ltd, had breached the terms of an agreement to supply certain materials for a construction project. The dispute centred on the interpretation of specific clauses within the contract, particularly those related to the quality and specifications of the materials provided.

The primary legal issues before the court were the interpretation of the contractual terms concerning the quality and specifications of the materials supplied by Gembane Pty Ltd. The plaintiff argued that the materials provided did not meet the agreed specifications and therefore constituted a breach of contract. The defendant, on the other hand, contended that the materials supplied were in accordance with the contract and that the plaintiff's claims were unfounded. The court was required to determine the precise meaning of the contractual terms in question and whether there had been a breach of the agreement.

The court examined the language of the contract, the surrounding circumstances at the time of the agreement, and the conduct of the parties post-contract. It found that the contract was clear in its requirements and that the materials supplied by Gembane Pty Ltd did not meet the specified standards. The court held that the defendant had breached the contract by failing to supply materials that met the agreed specifications. The court's reasoning was based on the objective interpretation of the contract terms, taking into account the plain meaning of the words used and the commercial purpose of the agreement. The court determined that the breach of contract by Gembane Pty Ltd warranted a remedy, and the plaintiff was entitled to compensation for the failure to supply compliant materials.

In its final orders, the court ruled in favour of the plaintiff, Daher, finding that Gembane Pty Ltd had breached the contract. The court ordered Gembane Pty Ltd to compensate Daher for the cost of the non-compliant materials and any additional expenses incurred due to the breach. The court also noted that the defendant could have avoided this outcome by ensuring compliance with the contractual specifications before supplying the materials.

Orders

Orders of the court

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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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