Kerr v Permanent Nominees (Aust) Ltd

In *Kerr v Permanent Nominees (Aust) Ltd*, the New South Wales Court of Appeal considered a dispute between a vendor, Kerr, and a purchaser, Permanent Nominees (Aust) Ltd, concerning the sale of a property. The core of the disagreement revolved around the interpretation of a special condition within the contract of sale, which purported to grant the purchaser a right to terminate the agreement if certain approvals were not obtained by a specified date.

The primary legal issue before the Court of Appeal was whether the special condition, which stated that the contract was subject to the purchaser obtaining "all necessary approvals" for a particular development by 31 March 1988, conferred a unilateral right of termination upon the purchaser, or if it imposed a mutual obligation on both parties to take reasonable steps to procure those approvals. The court also had to determine the consequences of the purchaser's failure to obtain the approvals by the stipulated date, particularly in light of the vendor's contention that the purchaser had not acted with sufficient diligence.

The Court of Appeal held that the special condition did not impose a positive obligation on the purchaser to take all reasonable steps to obtain the necessary approvals. Instead, it was interpreted as a condition precedent for the benefit of the purchaser, granting them an unfettered right to terminate the contract if the approvals were not obtained by the specified date, regardless of whether the purchaser had taken all reasonable steps to secure them. The court reasoned that the language of the condition was clear and did not imply any duty to pursue the approvals, distinguishing it from cases where a contractual term might imply such an obligation.

Consequently, the Court of Appeal found that the purchaser was entitled to terminate the contract by reason of the failure to obtain the necessary approvals by 31 March 1988, and dismissed the vendor's appeal.