Darin Nominees Pty Ltd v Franklin's SelfServe Pty Ltd

Darin Nominees Pty Ltd (the appellant) and Franklin's SelfServe Pty Ltd (the respondent) were parties to a retail lease agreement. The dispute concerned the interpretation of a rent review clause within that lease, specifically whether extrinsic evidence, including the course of negotiations, was admissible to assist in its construction. The matter came before the Court of Appeal of New South Wales.

The primary legal issue before the court was whether evidence of the parties' negotiations leading up to the execution of the lease was admissible to resolve the ambiguity in the rent review clause. This involved considering the parol evidence rule and its exceptions, particularly in the context of contractual interpretation.

The court held that the parol evidence rule generally precludes the admission of extrinsic evidence to contradict, vary, add to, or subtract from the terms of a written contract. However, it acknowledged that extrinsic evidence, including evidence of the surrounding circumstances and the parties' negotiations, may be admitted to aid in the construction of a contract where the language of the contract is ambiguous. In this instance, the court found that the rent review clause was indeed ambiguous, and therefore, evidence of the parties' negotiations was admissible to ascertain their common intention. The appeal was allowed.