Kirkby v Turner

The case of *Kirkby v Turner* concerned an appeal to the New South Wales Court of Appeal regarding a contractual dispute. The appellant, Kirkby, and the respondent, Turner, had entered into an agreement that included provisions for negotiating an extension of a rezoning timeframe. The central issue revolved around whether the parties were obligated to negotiate an extension when a precondition for such negotiation, namely the imminence of rezoning, had not been met.

The Court of Appeal was required to determine the proper construction of the agreement, specifically concerning the obligation to negotiate an extension of time for rezoning. The legal question was whether the phrase "based on the likelihood of rezoning being imminent" qualified the "extension" or the act of "negotiate," and how this impacted the enforceability of the negotiation clause when rezoning was demonstrably not imminent.

The Court applied an objective approach to the construction of the agreement, as espoused in *Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd*. It reasoned that parties to a contract are presumed to intend to undertake feasible obligations. In this instance, the Court found that it would be commercially unreasonable to interpret the agreement as requiring the parties to negotiate an extension based on a rezoning that was not imminent, as such a negotiation would be futile and based on a fundamentally incorrect premise. Therefore, the Court concluded that the parties' intention was to negotiate an extension only if rezoning had not been finalised and was likely to become imminent.

The appeal was dismissed, and the appellant was ordered to pay the costs of the appeal.