Elite Realty Development Pty Ltd v Sadek

Elite Realty Development Pty Ltd and others (the appellants) appealed decisions of the Supreme Court of Queensland concerning a joint venture agreement for property development. The dispute arose from an agreement to terminate this joint venture, which the appellants contended was entered into under duress, specifically following a violent gun attack. Despite the alleged duress, both parties performed the termination agreement. The core of the appeal concerned whether the performance of the agreement constituted affirmation, thereby barring rescission, and whether the issue of affirmation had been properly raised and considered at trial.

The Court of Appeal was required to determine whether the appellants could successfully argue that the termination agreement was voidable due to duress, notwithstanding their subsequent performance of its terms. Key legal issues included whether the duress, if established, had ceased to operate at the time of performance, and whether that performance amounted to an affirmation of the agreement. The Court also considered whether the issue of affirmation had been adequately pleaded and argued at first instance, and whether new arguments regarding affirmation should be permitted on appeal. Further, the Court examined whether a director had breached fiduciary duties in relation to the termination deed, and whether the company, not being a party to the deed, had suffered any loss.

The Court of Appeal reasoned that the appellants' conduct in performing the termination agreement, including making payments and transferring property, demonstrated an intention to be bound by its terms after the alleged duress had ceased. This conduct was held to constitute affirmation of the agreement, thereby precluding rescission. The Court found that the issue of affirmation was sufficiently canvassed at trial, even if not explicitly pleaded, and declined to grant leave to amend the notice of appeal to raise new arguments on this point. Consequently, the appeals were dismissed.

In the Maroubra Appeal, leave to amend the notice of appeal was refused, and the appeal was dismissed, with the appellants ordered to pay the respondents’ costs. In the Avoca Appeal, the appeal was also dismissed, with the appellants ordered to pay the respondents’ costs.