Fu Tian Fortune Pty Ltd v Park Cho Pty Ltd

Fu Tian Fortune Pty Ltd and another party appealed to the Court of Appeal of New South Wales against a decision concerning a contract for the sale of land. The dispute centred on whether the contract had been novated, effectively substituting the second appellant for the first appellant as the purchaser, or if the second appellant had merely exercised a right to nominate another transferee under the original contract.

The Court of Appeal was required to determine two primary legal issues. Firstly, whether the contract for sale had been effectively novated so that the second appellant replaced the first appellant as the purchaser. Secondly, the court had to consider whether the second appellant's actions constituted merely the exercise of a right to nominate another transferee, rather than a novation of the contract.

The Court of Appeal reasoned that for a novation to occur, there must be a clear intention by all parties to the original contract to extinguish the old contract and create a new one with a substituted party. In this instance, the court found that the evidence did not demonstrate the necessary intention to novate. Instead, the court concluded that the second appellant had acted within the scope of a right to nominate a transferee, which did not alter the fundamental contractual relationship between the original vendor and purchaser. The principles of contract law regarding novation, requiring the discharge of the original contract and the creation of a new one with the consent of all parties, were applied.

The appeal was dismissed, and the appellants were ordered to pay the respondent’s costs of the appeal.