Diakos v Mason

The appeal concerned a dispute between George Diakos (appellant) and Phillip Mason (respondent) regarding a relocation deed. Mr Mason, a tenant operating a post office and newsagency, had entered into the deed with Mr Diakos, the owner of a retail shopping centre, to facilitate the temporary relocation of his business during redevelopment. The central issues on appeal were whether the trial judge erred in finding that a clause requiring the payment of $250,000 did not constitute a penalty, and whether the trial judge erred in rejecting an allegation of unconscionable conduct by Mr Mason.

The court was required to determine the proper construction of a clause within the relocation deed, specifically whether it imposed an obligation on the appellant to pay $250,000 upon the failure of a specified event, and if so, whether this constituted an unenforceable penalty. Additionally, the court had to consider the claim of unconscionable conduct, examining whether the respondent had acted in such a manner as to warrant the refusal of relief.

The Full Court of the Supreme Court of South Australia dismissed the appeal. The court reasoned that, when properly construed, the clause in question imposed a contractual obligation on the appellant to pay $250,000 if a specified event did not occur. The court held that this clause was not a penalty clause. Furthermore, the court found that the claim of unconscionable conduct was advanced on a different basis on appeal than at trial, and in any event, the evidence did not support a finding of unconscionability.