JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE FULL COURT (WA)
CITATION: EXPECTATION PTY LTD -v- PINNACLE VRB LTD [2002] WASCA 160
CORAM: STEYTLER J
MILLER J
HASLUCK J
HEARD: 6 MARCH &
17 APRIL 2002
DELIVERED : 19 JUNE 2002
FILE NO/S: FUL 103 of 2001
BETWEEN: EXPECTATION PTY LTD
Appellant
AND
PINNACLE VRB LTD
Respondent
Catchwords:
Contract - Condition precedent - Whether failure to satisfy renders contract void or voidable
Contract - Implied terms - Implication that each party will do all that is necessary on its part to enable the other party to have the benefit of the contract - Whether party in breach can terminate for breach by the other - Circumstances in which defaulting party can terminate contract
Legislation:
Corporations Law, s 249D, s 249F
Rules of the Supreme Court (WA), O 63 r 9(2)
Result:
Appeal allowed
Category: A
Representation:
Counsel:
Appellant: Mr D M Stone
Respondent: Mr H Jolson QC, Mr G S Clarke & Mr J L Evans
Solicitors:
Appellant: Williams & Hughes
Respondent: Keogh & Co
Case(s) referred to in judgment(s):
Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corporation Ltd [1981] AC 909
Butt v M'Donald (1896) 7 QLJ 68
DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423
Foran v Wight (1989) 168 CLR 385
Gange v Sullivan (1966) 116 CLR 418
GR Mailman & Associates Pty Ltd v Wormald (Aust) Pty Ltd (1991) 24 NSWLR 80
GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631
Howtrac Rentals Pty Ltd v Thiess Contractors (NZ) Ltd [2000] VSC 415
Kyrwood v Drinkwater [2000] NSWCA 126
Mackay v Dick (1881) 6 App Cas 251
Mehmet v Benson (1965) 113 CLR 295
Newmont Pty Ltd v Laverton Nickel NL [1983] 1 NSWLR 181
Nina's Bar Bistro Pty Ltd v MBE Corporation (Sydney) Pty Ltd [1984] 3 NSWLR 613
Paltara Pty Ltd v Dempster (1991) 6 WAR 85
Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537
Roadshow Entertainment Pty Ltd v ACN 053 006 269 Pty Ltd, Receiver & Manager Appointed (1997) 42 NSWLR 462
Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596
State Trading Corporation of India Ltd v Golodetz Ltd [1989] 2 Lloyd's Rep 277
Case(s) also cited:
Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349
Alghussein Establishment v Eton College [1988] 1 WLR 587
Carr v JA Berriman Pty Ltd (1953) 89 CLR 327
Central Exchange Ltd v Anaconda Nickel Ltd [2001] WASC 128
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337
Coulton v Holcombe (1986) 162 CLR 1
Drinkwater v Caddyrack Pty Ltd, unreported; SCt of NSW (Young J); 25 September 1997
Garry Rogers Motors (Aust) Pty Ltd v Subaru…
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- Case
- [2002] WASCA 160
- Decision Date
CaseChat Overview and Summary
The court examined the nature of the breach and its implications for the contract's validity and termination rights. It was established that if non-compliance with a contractual obligation negates the defaulting party's right to terminate, there must be a direct causal relationship between the non-compliance and the failure to complete the contract, with the onus of proof on the non-defaulting party. The court scrutinised the trial judge's findings and noted that it was unclear whether the breach occurred before or after a specific date, 31 July 2000. Although the trial judge found that little effective work had been done after the extension of time to 31 July, he also noted that nothing effective happened thereafter in finalising the collaboration agreement. The court found that the trial judge did not affirm the Letter Agreement on 2 August 2000 and did not find that the condition precedent was waived after 31 July 2000.
The court concluded that the failure to satisfy the condition precedent did not automatically render the contract void or voidable. It held that the onus was on the non-defaulting party to prove a direct causal relationship between the breach and the contract's failure. The court found that the trial judge's reasoning did not clearly establish whether the condition precedent was breached before or after 31 July 2000, leaving some ambiguity in the timeline of events. The court also noted that the trial judge's finding that no further extension was sought or granted after 31 July 2000 was inconsistent with a waiver of the condition precedent. The final orders of the court would depend on a clearer understanding of the breach's timeline and its causal relationship with the contract's failure.
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
Established by: MILLER J
If non‑compliance with a contractual obligation is to take away the defaulting party's right to terminate, there must be a direct causal relationship between that non‑compliance and the failure to complete the contract, with the onus of proof lying upon the non‑defaulting party: see Nina's Bar Bistro Pty Ltd v MBE Corporation (Sydney) Pty Ltd [1984] 3 NSWLR 613 and Kyrwood v Drinkwater [2000] NSWCA 126, pars 154, 232. It is not clear from the trial Judge's reasons whether his Honour found that the parties had, by 31 July 2000, breached the obligation contained in cl 6 of the Letter Agreement (or an implied obligation to co‑operate) or whether the breach which he found occurred after that date. While the trial Judge said that little effective work appeared to have been done after the extension of time to 31 July was negotiated (and this was done on about 30 June 2000), he also said that, although the facsimile of 2 August "provided the affirmation that the parties would negotiate in good faith to finalise the collaboration [sic] agreement", it seemed to him that "thereafter nothing effective happened in that regard on either side". That being so, it might be the case that his Honour considered that the obligation to which I have referred was breached only after 2 August 2000, although it is not entirely clear what was intended by the reference to an "affirmation" and whether his Honour considered that there had been a prior breach. There was, in this respect, no plea of any affirmation (or, as I understand it, even any contention that there was an affirmation, no breach of the kind found having been alleged against Expectation). Also, while Expectation pleaded, in par 13.10 of its Reply, that on or about 2 August 2000 Pinnacle waived all conditions precedent to performance of the Letter Agreement that had not by that date been fulfilled, the only contention which appears to have been advanced by it at the trial in this respect was that the exchanges in early August had given rise to a variation of the Letter Agreement in a number of respects and that this variation had the effect of waiving the condition precedent. However, the contention that any variation was agreed upon was, as I have said, rejected by the trial Judge. I should add that, contrary to what is said in ground 4.3(f) of the grounds of appeal, the trial Judge did not find that, on 2 August 2000, both parties affirmed the Letter Agreement. All that he found (as I read his judgment) was, as I have said, that Mr McLernon's facsimile transmission to Mr Wantrup dated 2 August 2000 (which the trial Judge found to have been "legally ineffectual"), "provided the affirmation that the parties would negotiate in good faith to finalise the collaboration [sic] agreement". The trial Judge, as I read his reasons, made no finding that the condition precedent was waived after 31 July 2000. Rather, his finding (in par 161) that, after 31 July 2000, no further extension was sought or granted seems to me to be inconsistent with the notion that there was a waiver.