Gladio Pty Ltd v Buckworth

The case of Gladio Pty Ltd v Buckworth involved a dispute over the sale of shares in a company that carried the right to exclusive occupation of an apartment. The purchaser sought to rescind the contract on several grounds, including that the company had not unconditionally consented to the transfer as required by the contract, the company had failed to keep proper records, and the vendor had made an innocent misrepresentation concerning the air-conditioning system. The company argued, among other things, that the consent given was sufficient, the failure to minute the decision was not a breach of the contract, and the omission did not amount to an implied representation. The case also considered whether the purchaser was entitled to relief on grounds of unconscionability, frustration, or negligence, and whether certain 'without prejudice' letters could be admitted as evidence.

The court was required to decide whether the company's conditional consent to the transfer was sufficient under the contract, whether the failure to minute the decision to grant a revocable licence was a breach of the contract, whether the vendor's failure to disclose the licence amounted to an innocent misrepresentation, and whether the purchaser could rescind the contract on any of the other grounds argued. The court also had to determine whether certain 'without prejudice' communications could be admitted into evidence.

The court found that the company's conditional consent to the transfer did not satisfy the requirement for unconditional consent under the contract, and that the failure to minute the decision to grant the licence was a breach of the contract. However, the court found that the omission did not amount to an innocent misrepresentation because the purchaser could not have reasonably assumed that the air-conditioning was included in the contract. The court also found that the purchaser was not entitled to rescind the contract on grounds of unconscionability, frustration, or negligence. The court held that the 'without prejudice' letters could be admitted into evidence because the defendant had not objected to the admission of one of the letters in a timely manner.

The court ordered that the contract be rescinded and that the purchaser be entitled to a refund of the purchase price, less certain deductions. The court also ordered that certain 'without prejudice' letters be admitted into evidence.