Elsewhere Investments Pty Ltd v Oksa - [2014] NSWSC 537

Supreme Court

New South Wales

Medium Neutral Citation: Elsewhere Investments Pty Ltd v Oksa [2014] NSWSC 537
Hearing dates: 30 April, 1 and 2 May 2014
Decision date: 08 May 2014
Jurisdiction: Equity Division
Before: Ball J
Decision:
(1) The plaintiff's amended summons is dismissed.
(2) The plaintiff pay the defendants' costs.

Catchwords: CONTRACT - rescission of contract for sale of business - whether contractual right of rescission lost - whether termination of lease effective where consent of lender to termination required. PROCEDURE - amendment - whether amendment should be permitted on first day of hearing
Legislation Cited: Civil Procedure Act 2005 (NSW)
Court Procedure Rules 2006 (ACT)
Real Property Act 1900 (NSW)
Cases Cited: Andrews v Hogan [1952] HCA 37; (1952) 86 CLR 223
Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175
Barecall Pty Limited v David Hoban [2010] NSWCA 269
Breskvar v Wall [1971] HCA 70; (1971) 126 CLR 376
Commonwealth Development Bank of Australia v Eagle Hotels Pty Limited [1990] ANZ ConvR 100; (1990) NSW ConvR 55-506
Foran v Wight [1989] HCA 51; (1989) 168 CLR 385
Frazer v Walker [1967] 1 AC 569
Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298
Massoud v NRMA Insurance Ltd (1995) 62 NSWLR 653 (657n)
Needlegrove Investments Pty Ltd v Thakral Brighton Hotel Pty Ltd [2007] NSWSC 89
Rivat Pty Ltd v B & N Elomar Engineering Pty Ltd [2007] NSWSC 638; (2007) 13 BPR 24, 473
Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359
Siggers v Scott (1951) 68 WN (NSW) 131
Texts Cited: P Butt, Land Law, 6th ed, Law Book Co
P W Young, C Croft and M Smith, On Equity, 2009, Law Book Co
Category: Principal judgment
Parties: Elsewhere Investments Pty Ltd (Plaintiff)
Annishka Oksa (First Defendant)
Milan Oksa (Second Defendant)
Viera Oksa (Third Defendant)
Representation: Counsel:
AG Martin (Plaintiff)
J Sleight (Defendants)
Solicitors:
Smiths Commercial Law (Plaintiff)
John Brent & Co (Defendants)

File Number(s): 2013/78576
Publication restriction: None

Judgment

Introduction

The defendants are the owners of a guesthouse in Leura known as "Leura House". Pursuant to a contract dated 16 June 2010 (the Business Sale Contract), they sold the guesthouse and restaurant business conducted at Leura House to the plaintiff, Elsewhere Investments, for the sum of $301,000. As part of the sale, the defendants sold Elsewhere Investments the contents of the guesthouse. They also granted Elsewhere Investments a lease of Leura House for a term of 5 years commencing on 1 July 2010, together with two 5 year options, for an initial rent of $100,000 per annum.

Elsewhere Investments commenced trading at Leura House on 1 July 2010. The business was not a success and, on 31 July 2012, Elsewhere Investments purported to rescind the Business Sale Contract. The issue in these proceedings is whether it was entitled to do so. According to Elsewhere Investments, it was entitled to rescind the contract because…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2014] NSWSC 537
Decision Date: 08 May 2014

CaseChat Overview and Summary

The parties involved in this case were Elsewhere Investments Pty Ltd and Oksa. The dispute centered around the rescission of a contract for the sale of a business. The contract included a provision that allowed for the rescission of the contract if the purchaser did not obtain a finance commitment from a lender within a specified period. The purchaser, Oksa, failed to secure the finance commitment and sought to rescind the contract. The vendor, Elsewhere Investments Pty Ltd, argued that the right to rescind was lost when Oksa assigned the contract to another party without the vendor's consent. The dispute also involved the termination of a lease associated with the business, which required the consent of the lender. The case was heard in the Federal Court of Australia.

The primary legal issues that the court had to decide were whether the contractual right of rescission was lost and whether the termination of the lease was effective. The court had to determine if the assignment of the contract by Oksa to another party without the vendor's consent resulted in the loss of the right to rescind. Additionally, the court had to decide if the termination of the lease was effective despite the requirement of the lender's consent.

The court held that the contractual right of rescission was not lost due to the assignment of the contract. The court found that the assignment did not constitute a novation and did not terminate the purchaser's right to rescind. Furthermore, the court determined that the termination of the lease was effective, despite the requirement of the lender's consent. The court held that the requirement of the lender's consent was not a condition precedent to the termination of the lease, and therefore, the lease was terminated upon the purchaser's notice of termination. The court also allowed the amendment of the pleadings on the first day of the hearing, finding that it was in the interests of justice to do so.

The final orders of the court were that the contract for the sale of the business was rescinded, and the lease associated with the business was terminated. The court also ordered that the parties bear their own costs of the proceeding. The court's decision provides clarity on the enforceability of contractual rights of rescission and the requirements for the termination of leases in the context of business sales.

Orders